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 producers would increase:

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 producers would increase:

Quizplus · Accepted Answer

If this economy were to open to trade, domestic producers would increase production from 75 units to the world price level of 110 units (point E). Therefore, domestic production would increase by 35 units (110 – 75 = 35). Price would decrease from $15 to the world price of $10. Therefore, choice C and D are incorrect. The graph does not show any information about changing supply or demand conditions, which would alter the domestic equilibrium price or quantity.

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