Figure 9-2 -Refer to Figure 9-2.At the World Price and with Free

question 17

Multiple Choice

Figure 9-2

-Refer to Figure 9-2.At the world price and with free trade,

• A) the domestic quantity of baskets demanded is greater than the domestic quantity of baskets supplied.
• B) the basket market is in equilibrium.
• C) the domestic demand for baskets is perfectly inelastic.
• D) both domestic producers of baskets and domestic consumers of baskets are better off than they were without free trade.

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Definitions:

Differentiated Products

Goods or services that are distinguished from others by quality, design, branding, or other features, even if they serve the same purpose.

Monopolistic Competitor

A market structure where many companies sell products that are similar but not identical, allowing for some degree of market power and product differentiation.

Short Run

A period in economics during which at least one factor of production is fixed in quantity; the opposite of the long run, where all factors of production are variable.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing firms to adjust all inputs.