The figure below shows the domestic supply and demand demand for shoes. As labeled, the no-trade domestic equilibrium occurs at a price of $80 per pair of shoes. If international trade is permitted, the world supply price is labeled at $60 per pair of shoes. PA P = $80 P = $60 S 1,000 1,200 1,300 Number of shoes Suppose the cost of domestic production decreases so that the new equilibrium domestic price of a pair of shoes is $70. As a result, which of the following is true? a. The number of pairs of shoes exported from the country increases b. The number of pairs of shoes exported from the country decreases C. The number of pairs of shoes imported into the country decreases d. The number of pairs of shoes imported into the country increases

The figure below shows the domestic supply and demand demand for shoes. As labeled, the no-trade domestic equilibrium occurs at a price of $80 per pair of shoes. If international trade is permitted, the world supply price is labeled at $60 per pair of shoes. PA P = $80 P = $60 S 1,000 1,200 1,300 Number of shoes Suppose the cost of domestic production decreases so that the new equilibrium domestic price of a pair of shoes is $70. As a result, which of the following is true? a. The number of pairs of shoes exported from the country increases b. The number of pairs of shoes exported from the country decreases C. The number of pairs of shoes imported into the country decreases d. The number of pairs of shoes imported into the country increases

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.8P

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