Use the following table for Country X to answer the question below. Column 1 of the table is the price of a product. Column 2 is the quantity demanded domestically (Q_dd) and Column 3 is the quantity supplied domestically (Q_sd). Refer to the table above. If Country X opens itself up to international trade, at what world price will it begin exporting some units of the product?

Question

Quizplus · Accepted Answer

Opening itself up to international trade means that the domestic price will now be determined by the world price. At a price of $3.00, the quantity supplied domestically (4) exceeds the quantity demanded domestically (3), which means there is a surplus of 1 unit. This implies that producers in Country X will be willing to export the surplus unit at the world price of $3.00 or higher. Therefore, any price above $3.00 will result in Country X exporting some units of the product.

Use the Following Table for Country X to Answer the Question