How many units will a country import if S = 1P represents its home supply curve, D = 100 - 1P represents its home demand curve, and the world price is $25?

Question

Quizplus · Accepted Answer

The world price of $25 is below the equilibrium price of the home market, which is where the supply and demand curves intersect at P = 50 and Q = 50. Therefore, the country will import the difference between its home demand and home supply at the world price, which is 100 - 25 = 75. However, since the country is already producing 50 units domestically, it will only need to import 75 - 50 = 25 units. Therefore, the answer is B) 50.

How Many Units Will a Country Import If S =