Free Trade and Trade Protection (id: a124d6a02)

本题目来源于试卷: Free Trade and Trade Protection，类别为 IB经济学

[单选题]

Using the diagram above, calculate the change in producer revenue after it engages in international trade.

A. US 400 million
B. US 250 million
C. US 1150 million
D. US 1650 million


参考答案:  C


本题详细解析:

C

$\underset{‾}{\text{Explanation}}$:
$Producerrevenuebeforetrade=20\times 55=1100$

When they can engage in free trade, domestic producers charge the world price ($\text{\$}$30). This reduces domestic demand to 25, but producers will export 50 units, so domestic producers sell 75 units at the world price.

$Producerrevenueaftertrade=domesticrevenue+exportrevenue$
$$ $2250=750+1500$

$Changeinproducerrevenue=2250-1100=1150$

The following options apply the formula incorrectly:

Option A is calculated by subtracting the revenue from domestic market ($20\times 55$) from the revenue only from exports ($75-25$) $\times 30$.

Option B is calculated by subtracting the revenue calculated by multiplying domestic price (20) with domestic quantity demanded when the country engages in trade (25) from the revenue earned domestically after trade:

$$ $(30\times 25)-(20\times 25)=250$

Option D is calculated by multiplying the world price (30) with the quantity produced before trade (55)

$$ $(30\times 55)=1650$

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