The First Panel in the Following Figure Shows the Domestic

question 66

Multiple Choice

The first panel in the following figure shows the domestic demand (D) and supply (S) curves of Columbian coffee and the second panel shows the import demand and export supply of Columbian coffee in the international market.Figure 20.1

-If the world price of steel is greater than the U.S. "no-trade" domestic equilibrium price of steel, the United States:

• A)will not produce steel.
• B)will demand steel from the rest of the world.
• C)will supply steel to the rest of the world.
• D)will not trade in steel.
• E)will have a shortage of steel in the domestic market.

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Definitions:

Fixed Cost

Costs that do not change with the level of output produced, such as rent or salaries.

Lawn-mowing

The process of cutting or trimming the grass in a yard or field to maintain a neat and uniform appearance.

Variable Costs

Expenses that change in proportion to the amount of goods or services produced, like labor and materials.

Profit-maximizing Output

The point of production where a company reaches its maximum profit, occurring when marginal cost matches marginal revenue.