The First Panel in the Following Figure Shows the Domestic

question 34

Multiple Choice

The first panel in the following figure shows the domestic demand (D) and supply (S) curves of Columbian coffee and the second panel shows the import demand and export supply of Columbian coffee in the international market.Figure 20.1

-Refer to Figure 20.1. If the price of Columbian coffee falls to $6 in the international market:

• A)there will be an excess supply of 8 pounds of Columbian coffee in the international market.
• B)the Columbian domestic market for coffee will be in equilibrium.
• C)the international market for coffee will be in equilibrium.
• D)there will be an excess demand of 4 pounds for coffee in Columbia's domestic market.
• E)there will be an excess supply of coffee in Columbia's domestic market.

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Definitions:

Investment

The action of allocating resources, usually money, with the expectation of generating an income or profit, often through the purchase of assets that are expected to increase in value.

Private Saving

The portion of individual or household income that is not consumed or taxed, often saved or invested for future use.

National Saving

The total of private and public savings in a country, representing the portion of national income not consumed or spent by the government.

Closed Economy

A type of economic system where a country does not engage in trade with other countries, aiming to be self-sufficient.