Refer to the Graph Shown for a Small Country That

question 76

Multiple Choice

Refer to the graph shown for a small country that is a price taker internationally. Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit.Starting from a free trade equilibrium, an import quota of 2,500 would cause domestic production to:

• A)increase from 6,100 to 7,400.
• B)increase from 2,400 to 3,600.
• C)decrease from 4,800 to 3,600.
• D)decrease from 7,400 to 6,100.

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