The Figure Below Shows the Demand (D) and Supply (S)

question 71

Multiple Choice

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.?Figure 20.1??In the figure,?P₁: Price of the good in the international market.?P₂: Price of the good in the domestic market after the imposition of tariff by the government.?P₃: No-trade price of the good in the domestic market.

-Refer to Figure 20.1. If the government imposes a tariff such that the price of the good in the domestic market is P₂ when the international price is P₁:

• A) the import of the good by the domestic country increases by Q₅ - Q₄ units.
• B) the import of the good by the domestic country declines.
• C) the quantity of the good exported by the domestic country declines.
• D) the domestic country is in equilibrium.
• E) the quantity of the good exported by the domestic country increases.

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