Refer to the graph above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will:

Question

Quizplus · Accepted Answer

When the world price for the product is $0.50, the domestic price in Econland is higher than the world price, and thus domestic producers will supply Qs (400 units). At the same time, domestic consumers will demand Qd (900 units). The difference between Qd and Qs represents the quantity that Econland must import to satisfy domestic demand, which is 900-400=500 units. Therefore, the correct answer is C: import 400 units.

Refer to the Graph Above Showing the Domestic Demand and Supply