Suppose the Domestic Market Demand Function in a Certain Market

question 14

Multiple Choice

Suppose the domestic market demand function in a certain market where Q is measured in thousands of units is Q^d = 20 - 2.5P,and the domestic market supply function is Q^s = 2.5P - 7.5.Suppose further that the world price for the good in question is $3.40 per unit.Under conditions of free trade,how much producer surplus will there be?

• A) $26,450
• B) $200
• C) $400
• D) $600

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