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 an autarky,producers would enjoy area:

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 an autarky,producers would enjoy area:

Quizplus · Accepted Answer

In an autarky, the domestic price of the good will be determined by the domestic demand and supply. The domestic quantity demanded is given by point A and the domestic quantity supplied is given by point B. The domestic price will be where these two points intersect, which is $5 per unit. At this price, the domestic quantity demanded is greater than the domestic quantity supplied, so there will be excess demand for the good. This means that producers would be able to sell all of their production at this price, which is shown by area EFG. Therefore, the correct answer is D (EFG).

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