Suppose That the Free-Trade Offer Curve of Country I Is

question 21

Multiple Choice

Suppose that the free-trade offer curve of country I is drawn with country I's exports of good A on the horizontal axis and country I's imports of good B on the vertical axis. If country I now places an import quota of 100 units of good B, country I's offer curve

• A) will have its normal free-trade appearance up to 100 units on the vertical axis and then will become a horizontal line back to the vertical axis.
• B) will have its normal free-trade appearance up to 100 units on the horizontal axis and then will become a vertical line going upward and parallel to the vertical axis.
• C) will shift to the left or vertically upward by 100 units at each level of exports of good A.
• D) will shift to the right or vertically downward by 100 units at each level of exports of good A.

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Definitions:

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