Answer the question on the basis of the following domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. $\begin{array} { c c c }
\begin{array} { c }
\text { Quantity } \
\text { Supplied } \
\text { (Domestic) }
\end{array} & \text { Price } & \begin{array} { c }
\text { Quantity } \
\text { Demanded } \
\text { (Domestic) }
\end{array} \
12 & \$ 5 & 2 \
10 & 4 & 4 \
7 & 3 & 7 \
4 & 2 & 11 \
1 & 1 & 16
\end{array}$ Refer to the given data.If the economy was opened to free trade and the world price of $1 prevailed,the price and quantity sold of this product would be:

Question

Answer the question on the basis of the following domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. $\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { Supplied } \
\text { (Domestic) }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded } \
\text { (Domestic) }
\end{array} \
 12 & \$ 5 & 2 \
10 & 4 & 4 \
7 & 3 & 7 \
4 & 2 & 11 \
1 & 1 & 16
\end{array}$ Refer to the given data.If the economy was opened to free trade and the world price of $1 prevailed,the price and quantity sold of this product would be:

Quizplus · Accepted Answer

When the economy is opened to free trade, the domestic price will equal the world price of $1. At this price, domestic producers will supply 6 units and domestic consumers will demand 10 units, resulting in a shortage of 4 units. These 4 units will be supplied by foreign producers, so the total quantity sold will be 16 units at a price of $1. Therefore, choice B is the correct answer.

Answer the Question on the Basis of the Following Domestic