Refer to the Figure Below to Answer the Following Questions

question 78

Multiple Choice

Refer to the figure below to answer the following questions.

Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, international trade ________ producer surplus in Canada by ________.

• A)decreases; $2.88 billion
• B)decreases; $1.92 billion
• C)increases; $4.8 billion
• D)increases; $3.6 billion
• E)decreases; $4.8 billion

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Definitions:

Wealth

Refers to the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions.

Expected Utility Function

A mathematical representation of a decision-maker's preferences concerning uncertain outcomes, factoring in the utility of each outcome and its probability.

Utility Function

A formulation used in economics to depict how different combinations of goods or services yield varying levels of happiness or utility to an individual.

Risk Neutral

A description of an individual or entity that does not show a preference for risk, valuing all investments purely by their expected return without concern for their risk.