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

Question

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

Quizplus · Accepted Answer

If the economy were to open to trade, domestic producers would have to compete with producers from other countries who are willing to supply at a lower price. This would drive down domestic prices to the world price of $10 for all units, as shown by the intersection of the domestic supply and the world price lines. Therefore, choice B is the correct answer.

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