Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.If Isoland allows international trade,then it will be an exporter of peaches if and only if the world price of peaches is
A)above $2.
B)below $4.
C)above $4.
D)below $7.

Question

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. 
-Refer to Figure 9-18.If Isoland allows international trade,then it will be an exporter of peaches if and only if the world price of peaches is
A)above $2. 
B)below $4. 
C)above $4. 
D)below $7.

Quizplus · Accepted Answer

According to the diagram, Isoland's domestic price of peaches is $2 per unit. If the world price of peaches is below $2, it would be cheaper for Isoland to produce peaches domestically and import them, rather than exporting them. If the world price is between $2 and $4, Isoland would not export or import peaches. However, if the world price of peaches is above $4, Isoland would be able to export peaches and earn a higher profit than producing them domestically. Therefore, the answer is C, above $4.