Asksia AI LOGO

Sia

Question
Microeconomics
Posted 9 months ago

The graph shown here illustrates the domestic market for cheese. The domestic price of cheese is $18\$ 18 and the world price of cheese is $10\$ 10.

How much is imported or exported in this market?
Choose 1 answer:
(A) export 32 tons of cheese
(B) import 24 tons of cheese
(C) import 8 tons of cheese
(D) export 8 tons of cheese
(E) import 16 tons of cheese
Related content
Sample free response question (FRQ) on tariffs and trade
7:227: 22
Trade and tariffs
Sign in to unlock the answer
Answer from Sia
Posted 9 months ago
Solution
a
Equilibrium Analysis: In a perfectly competitive market, equilibrium is achieved where the supply and demand curves intersect. This point represents the allocative efficiency where the quantity supplied equals the quantity demanded. In the given graph, this occurs at a price of $18 and a quantity of 16 tons
b
Import Calculation: The domestic price of cheese is 18,whiletheworldpriceis18, while the world price is 10. At the world price of 10,thequantitydemandeddomesticallyis32tons,andthequantitysupplieddomesticallyis8tons.Thedifferencebetweenthequantitydemandedandthequantitysuppliedattheworldpricerepresentstheamountofcheeseimported.Therefore,theamountofcheeseimportedis10, the quantity demanded domestically is 32 tons, and the quantity supplied domestically is 8 tons. The difference between the quantity demanded and the quantity supplied at the world price represents the amount of cheese imported. Therefore, the amount of cheese imported is 32 - 8 = 24$ tons
Answer
(B) import 24 tons of cheese
Key Concept
Import Calculation
Explanation
The amount of cheese imported is determined by the difference between the quantity demanded and the quantity supplied at the world price. In this case, the domestic market demands 32 tons and supplies 8 tons at the world price of $10, resulting in an import of 24 tons.

Not the question you are looking for? Ask here!

Enter question by text

Enter question by image

Unlock Smarter Learning with AskSia Super!

Join Super, our all-in-one AI solution that can greatly improve your learning efficiency.

30% higher accuracy than GPT-4o
Entire learning journey support
The most student-friendly features
Study Other Question