The figure below shows the demand (D)and supply (S)curves of cocoa in the U.S. Figure 21.4 Refer to Figure 21.4.Assume that Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound.If the U.S.enters into a free trade agreement (FTA)with Ghana, what would be its total cocoa imports?

Question

The figure below shows the demand (D)and supply (S)curves of cocoa in the U.S. Figure 21.4  Refer to Figure 21.4.Assume that Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound.If the U.S.enters into a free trade agreement (FTA)with Ghana, what would be its total cocoa imports?

Quizplus · Accepted Answer

If Ghana is the only cocoa exporter supplying cocoa in the world market at $6 per pound, then the U.S. imports will be limited to the quantity demanded at that price, which is 200 pounds (the point where the demand curve intersects the supply curve). If the U.S. enters into a free trade agreement (FTA) with Ghana, it can import as much cocoa as it wants from Ghana, but it is unlikely to import more than 200 pounds because that is the quantity demanded at $6 per pound. Therefore, the total cocoa imports would be 200 pounds.

The Figure Below Shows the Demand (D)and Supply (S)curves of Cocoa