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

question 128

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,relative to the no-trade situation,international trade in cardboard produces which of the following results for Boxland?

• A)It decreases consumer surplus,increases producer surplus,and decreases total surplus.
• B)It decreases consumer surplus,increases producer surplus,and increases total surplus.
• C)It decreases consumer surplus,decreases producer surplus,and decreases total surplus.
• D)It increases consumer surplus,increases producer surplus,and increases total surplus.

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Definitions:

Profit-maximizing Level

The output level at which a firm achieves the highest possible profit.

Short-run

In economics, a period wherein at least one input (like capital) is fixed, and firms can only adjust variable inputs (like labor).

Normal Profits

The level of profit necessary to keep a firm in a specific industry or market in the long run, equating to the firm’s opportunity costs.

Profit-maximizing

A business strategy or operational mode where the primary goal is to achieve the maximum possible profits.