Examlex
The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.Figure 21.1
In the figure,
P1: Price of the good in the international market.P2: Price of the good in the domestic market after the imposition of tariff by the government.P3: No-trade price of the good in the domestic market.
-If the world price of a good is lower than its domestic equilibrium price, the country will:
Law of Demand
The law of demand states that, all else being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa.
Quantity Demanded
The complete volume of a particular good or service that purchasers are both eager and financially able to acquire at a certain price within a market.
Price Increases
Situations where the cost of goods or services rise, often reflecting inflation or increased production costs.
Cancer-Causing Particles
Substances or elements that, upon exposure, increase the risk of developing cancer in living tissues.
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