Refer to the graph shown for a small country that is a price taker internationally.
Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. If there are no trade restrictions, this country will produce:
A. 4,800 units domestically and import 2,600 units.
B. 2,400 units domestically and import 5,000 units.
C. 4,800 units domestically and consume 4,800 units.
D. 7,400 units domestically and export 5,000 units.
Answer: B
Economics
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