Figure 9-18

question 197

Multiple Choice

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.If Isoland allows international trade and the world price of peaches is $5,then

• A)producer surplus will be smaller than it would be if Isoland banned trade.
• B)consumer surplus will be smaller than it would be if Isoland banned trade.
• C)the domestic quantity of peaches demanded will exceed the domestic quantity of peaches supplied.
• D)Isoland will be an importer of peaches.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Surplus

The amount by which revenue exceeds expenses in a given period, indicating a positive financial state.

Share Option

A right granted by a company to its employees or executives to purchase shares in the company at a preset price, often used as part of compensation packages.

Exercise Price

The specified price at which an option holder can buy (call) or sell (put) the underlying security or commodity.