The Graph Shown Demonstrates the Domestic Demand and Supply for a Good

question 48

Multiple Choice

The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to open to trade, consumers would:

• A)enjoy a net gain of the surplus in areas D + E + F + G.
• B)suffer a net loss of the surplus in areas D + E + F + G.
• C)lose the surplus in areas D + E + F + G to producers.
• D)lose the surplus in areas F + G to deadweight loss.

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Definitions:

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, leading to market stability.

Fine Imposed

A monetary penalty levied by an authority as punishment for a violation or infringement.

Demand Curve

Illustrates the willingness of consumers to buy a particular quantity of a good at various price levels, with a downward slope indicating that as price decreases, demand increases.

Plaster

A building material composed of water, lime, and sand, used for coating walls and ceilings or for creating architectural decorations.