Figure 9-18

question 210

Multiple Choice

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $5,then the policy change results in

• A)a decrease in consumer surplus.
• B)an increase in producer surplus.
• C)an increase in total surplus.
• D)All of the above are correct.

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Definitions:

Operating Income

Earnings from a company's core business operations, excluding deductions of interest and taxes.

Variable Costing

An accounting method where only variable production costs are charged to product units, excluding fixed overhead costs.

Absorption Costing

An accounting method that includes all direct and indirect manufacturing costs in the cost of a product.

Operating Income

A measure of a company's profitability, excluding non-operating expenses such as interest and taxes, and non-operating income.