The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S. Figure 21.4
- Refer to Figure 21.4.Assume that Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound.If the U.S.enters into a free trade agreement (FTA) with Ghana,what would be its total cocoa imports?

Question

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S. Figure 21.4 
- Refer to Figure 21.4.Assume that Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound.If the U.S.enters into a free trade agreement (FTA) with Ghana,what would be its total cocoa imports?

Quizplus · Accepted Answer

With the entry into the free trade agreement, the U.S. can import cocoa at the world market price of $6 per pound from Ghana. The point where the world price intersect the demand curve is at a quantity of 400 pounds (point A). Similarly, the point where the world price intersects the supply curve is at a quantity of 200 pounds (point B).

Therefore, the maximum amount of cocoa the U.S. can import is 200 pounds, which is the quantity supplied by Ghana at the world market price. Hence, the answer is option C) 200 pounds.

The Figure Below Shows the Demand (D) and Supply (S)