Refer to the Figure Below to Answer the Following Question

question 115

Multiple Choice

Refer to the figure below to answer the following question. Figure 7.2.4
-Refer to Figure 7.2.4.The graph shows the demand for shoes in Brazil,D_B,the supply of shoes produced in Brazil,S_B,and the market equilibrium in Brazil when it does not trade internationally.If the world price of a pair of shoes is $20 and Brazil opens up and trades internationally,producer surplus in Brazil ________ and consumer surplus in Brazil ________.

• A)increases by area C + D;decreases by area C
• B)increases by area C;decreases by area C and a deadweight loss equal to area D arises
• C)increases by area D;decreases by area D
• D)decreases by area C;increases by area C + D
• E)decreases by area C + D;increases by area C

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Definitions:

Nontariff Barrier

Refers to any restriction, other than tariffs, that is used by countries to control the amount of trade across their borders, including quotas, embargoes, or regulations.

Trade Embargo

A government-imposed restriction on trade with a specific country or the exchange of specific goods.

Tariff

A tax imposed on imported goods to regulate trade by increasing the price of foreign products.

Quantity Demanded

The actual amount of a good or service consumers are willing to buy at some specific price.