Refer to the information provided in Figure 18.3 below to answer the questions that follow. Figure 18.3
-Refer to Figure 18.3. The domestic price of shoes is $80. After trade the price of a pair of shoes is $60. Now domestic production costs fall so that the equilibrium domestic price of a pair of shoes is $70. This would cause

Question

Refer to the information provided in Figure 18.3 below to answer the questions that follow.  Figure 18.3
-Refer to Figure 18.3. The domestic price of shoes is $80. After trade the price of a pair of shoes is $60. Now domestic production costs fall so that the equilibrium domestic price of a pair of shoes is $70. This would cause

Quizplus · Accepted Answer

When domestic production costs fall, leading to a decrease in the domestic price of shoes from $80 to $70 (but still above the world price of $60), the domestic market becomes more competitive against imports. This results in a decrease in the quantity of shoes imported, as consumers and retailers will prefer the now cheaper domestic options over the more expensive imports.

Refer to the Information Provided in Figure 18