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Figure: The Domestic Supply and Demand for SUVs in Canada
-(Figure: The Domestic Supply and Demand for SUVs in Canada)Use Figure: The Domestic Supply and Demand for SUVs in Canada.Suppose that the world price equals $50 000 and there is free trade.Canada would _____ SUVs.

Question

Use the following to answer questions:
Figure: The Domestic Supply and Demand for SUVs in Canada 
-(Figure: The Domestic Supply and Demand for SUVs in Canada)Use Figure: The Domestic Supply and Demand for SUVs in Canada.Suppose that the world price equals $50 000 and there is free trade.Canada would _____ SUVs.

Quizplus · Accepted Answer

At a world price of $50 000, the quantity demanded in Canada exceeds the quantity supplied domestically, creating a shortage. With free trade, Canadian producers will increase supply to meet world prices, resulting in an increase in the quantity supplied to 11 million. At this level of supply, Canadian demand is satisfied, and 6 million SUVs will be exported to other countries.

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