Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel.The world price of peaches is $52 per bushel.The U.S.is a price-taker in the market for peaches.
-Refer to Scenario 9-1.If trade in peaches is allowed,the United States
A)will become an importer of peaches.
B)will become an exporter of peaches.
C)may become either an importer or an exporter of peaches,but this cannot be determined.
D)will experience increases in both consumer surplus and producer surplus.

Question

Quizplus · Accepted Answer

Since the world price is higher than the domestic price, the U.S. will export peaches to take advantage of the higher prices in the world market.

Scenario 9-1 The Before-Trade Domestic Price of Peaches in the United States