Refer to Figure 35.6:
If S₁ represents the U.S.domestic supply of a good, what does S₂ most likely represent?

Question

Refer to Figure 35.6: If S₁ represents the U.S.domestic supply of a good, what does S₂ most likely represent?

Quizplus · Accepted Answer

S₂ most likely represents U.S. supply under quota-restricted trade. This is because the graph shows a reduction in supply from S₁ to S₂, which suggests that the quantity of the good produced and supplied in the U.S. is restricted by a quota. A tariff-restricted trade would result in a shift of the supply curve upward, not a reduction in quantity supplied. Dumping and production possibilities under free trade are not directly related to the graph.