Refer to the Figure Below to Answer the Following Question

question 69

Multiple Choice

Refer to the figure below to answer the following question.

Figure 7.2.4
-Refer to Figure 7.2.4. The graph shows the demand for shoes in Brazil, DB, the supply of shoes produced in Brazil, SB, and the market equilibrium in Brazil when it does not trade internationally. If the world price of a pair of shoes is $20 and Brazil opens up and trades internationally, producer surplus in Brazil ________ and consumer surplus in Brazil ________.

• A)increases by area C + D; decreases by area C
• B)increases by area C; decreases by area C and a deadweight loss equal to area D arises
• C)increases by area D; decreases by area D
• D)decreases by area C; increases by area C + D
• E)decreases by area C + D; increases by area C

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Definitions:

Units of Production

A method of depreciation that allocates the cost of an asset over its useful life based on the number of units it produces or its operational hours.

Budgeted Units

The quantity of product or services that a company plans to produce or sell in a specific period, detailed in its budget.

Inventory

The total amount of goods and materials held by a business for the purpose of resale or production, including raw materials, work-in-progress, and finished goods.

Manufactured Units

Manufactured units refer to the total number of units produced by a company during a specific period through its manufacturing process.