Price 75 70 65+ 60 Domestic supply 55 World 50 price 45 40+ F 35 30 Domestic demand 25+ 20 15 10+ 123 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Quantity Using the above figure, by how much did Total Surplus increase in the market as a result of international trade? G+ H D+F
Price 75 70 65+ 60 Domestic supply 55 World 50 price 45 40+ F 35 30 Domestic demand 25+ 20 15 10+ 123 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Quantity Using the above figure, by how much did Total Surplus increase in the market as a result of international trade? G+ H D+F
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:The image presents a supply and demand graph illustrating the impact of international trade on total surplus. The y-axis represents price, ranging from 0 to 75, and the x-axis denotes quantity, ranging from 0 to 26.
Key elements in the graph:
- A downward-sloping Domestic Demand curve.
- An upward-sloping Domestic Supply curve.
- A horizontal line indicating the World Price, which is below the intersection of the domestic supply and demand curves.
The regions on the graph are labeled as:
- A: Area above the world price line and below the domestic demand curve.
- B: Area below the domestic demand curve and above the domestic supply curve, up to the world price.
- C: Area below the world price and above the domestic supply curve.
- D, F: Areas between the domestic supply, domestic demand, and world price lines.
- G, H: Areas between the domestic supply and world price line, and above the world price line up to the domestic demand curve.
The question asks: "Using the above figure, by how much did Total Surplus increase in the market as a result of international trade?"
Options provided are:
- ○ G + H
- ○ D + F
- ○ G
- ○ H
The graph demonstrates how the introduction of the world price affects quantities supplied and demanded domestically, and identifies areas corresponding to changes in producer and consumer surplus due to trade.
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Answer : G
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