Refer to the Figure Below to Answer the Following Questions

question 83

Multiple Choice

Refer to the figure below to answer the following questions.

Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, international trade ________ total surplus in Canada by ________.

• A)decreases; $2.56 billion
• B)increases; $4.8 billion
• C)decreases; $3.6 billion
• D)decreases; $1.92 billion
• E)increases; $1.92 billion

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Definitions:

Total Revenue

The total income a firm receives from the sale of its products, calculated as the price per unit times the number of units sold.

Inelastic

A demand is considered inelastic when it does not significantly change with the price of a good or service, indicating that consumers are relatively insensitive to price changes.

Elastic

Describing a situation where the demand or supply for a product or service is sensitive to changes in price or other factors.

Decrease Supply

A situation where there's a reduction in the quantity of a good or service that producers are willing and able to sell at a given price.