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

question 237

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 $45.Then,relative to the no-trade situation,international trade in cardboard

• A)benefits Boxlandian consumers by $721 and harms Boxlandian producers by $525.00.
• B)benefits Boxlandian consumers by $721 and harms Boxlandian producers by $598.50.
• C)benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50.
• D)harms Boxlandian consumers by $336 and harms Boxlandian producers by $525.00.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a specified time period.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price over a specified period of time.

Rationing Function

The ability of market prices to allocate scarce goods and services among competing demands.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and products that are similar, leading to price-taking behavior.