This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According the graph shown,if this economy were open to free trade,it would:

Question

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According the graph shown,if this economy were open to free trade,it would:

Quizplus · Accepted Answer

In a free trade scenario, the domestic market would shift towards the world price, as there are no trade barriers. As the domestic price is greater than the world price, there will be a greater demand for imports, as the domestic consumers would prefer to buy at the world price. Therefore, this economy would import the good.

This Graph Demonstrates the Domestic Demand and Supply for a Good,as