The Figure Below Shows the Demand (D) and Supply (S)

question 85

Multiple Choice

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:

• A)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
• B)export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically.
• C)import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers.
• D)export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically.
• E)import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers.

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Definitions:

External Users

Individuals or entities outside a company who utilize its financial information, such as investors and creditors.

Separate Legal Entity

A principle acknowledging that a corporation has a separate legal existence from its shareholders, protecting them from the company's debts.

Partnership

A business owned by two or more persons associated as partners.

Labour Unions

Organizations formed by workers to protect their rights and interests, often engaging in collective bargaining with employers over wages, benefits, and working conditions.