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. If shoes are a normal good and income in this country falls, then we would expect

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. If shoes are a normal good and income in this country falls, then we would expect

Quizplus · Accepted Answer

If income in the country falls, the demand for all normal goods, including shoes, will decrease. This will lead to a decrease in the quantity demanded for shoes at both the domestic and world prices. Since the domestic price for shoes is higher than the world price after trade, the country will still be importing shoes even at the lower quantity demanded. So, the number of pairs of shoes imported into this country is likely to decrease.

Refer to the Information Provided in Figure 18