The Following Graph Shows the Demand for and the Supply

question 72

Multiple Choice

The following graph shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, the welfare loss resulting from higher domestic production costs is represented by the area _____.

• A) a
• B) b
• C) c and d
• D) g and h
• E) e

---

Definitions:

Borrowed

Something obtained or received temporarily with the intention of returning it or its equivalent value.

Interest

The expense associated with lending money or the profit from an investment, usually shown as a percentage.

Days

A unit of time equivalent to 24 hours, generally used to measure durations and intervals.

Investment

The allocation of resources, usually money, in expectation of generating income or profit.