Scenario 9-2 • for a Small Country Called Boxland,the Equation of the of the Domestic

question 23

Multiple Choice

Scenario 9-2
• For a small country called Boxland,the equation of the domestic demand curve for
cardboard is ,
where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard.
• For Boxland,the equation of the domestic supply curve for cardboard is ,
where represents the domestic quantity of cardboard supplied,in tons,and again
represents the price of a ton of cardboard.
-Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,if Boxland goes from prohibiting international trade in cardboard to allowing international trade in cardboard,

• A)domestic producers of cardboard become better off and domestic consumers of cardboard become better off.
• B)domestic producers of cardboard become better off and domestic consumers of cardboard become worse off.
• C)domestic producers of cardboard become worse off and domestic consumers of cardboard become better off.
• D)domestic producers of cardboard become worse off and domestic consumers of cardboard become worse off.

---

Definitions:

Variable Production Expense

Costs that vary directly with the level of production, including raw materials and direct labor costs.

Variable Selling

Costs associated with selling a product that vary directly with the volume of sales.

Variable Administrative Expenses

Costs related to the administration of a business that vary with the level of activity or production.

Fixed Cost

Charges that are stable in spite of the levels of output or sales achieved, such as housing lease, salaries paid to employees, and insurance expenses.