Scenario: the Following Figure Shows the Demand Curve, D, and the Supply

question 223

Multiple Choice

Scenario: The following figure shows the demand curve, D, and the supply curve, S, of chairs in Barylia. Barylia is open to free trade. The world price of chairs is $3, and the government of Barylia decides to impose a $1 tariff on the import of chairs.

-Refer to the scenario above.What is the consumer surplus when Barylia opens up to free trade?

• A) $155
• B) $215
• C) $245
• D) $325

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Definitions:

Oligopoly

A market structure in which a few firms dominate, often resulting in reduced competition.

Collude

When firms work together, often in secret, to fix prices, limit production, or divide markets, in order to increase profits by reducing competition.

Cartel

An alliance of producers who agree to control prices, production, and marketing of their products to maximize collective profits.

Oligopoly Market

A market structure characterized by a small number of firms that dominate the market, often leading to limited competition.