The Following Graph Shows the Domestic Supply and Demand Curves

question 16

Multiple Choice

The following graph shows the domestic supply and demand curves for a good. S1 and S2 represent the domestic industry supply before and after the provision of a subsidy by the government respectively, while D represents the domestic demand for the product. Prior to the subsidy, the country was importing 300 units of the good. Refer to the graph to answer the question. At the world price, the domestic demand is:

• A) 100 units.
• B) 240 units.
• C) 300 units.
• D) 400 units.

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