Home Market World Market Foreign Market a Price, P Price, P Price, P XS S- MD D+

Question

Home Market World Market Foreign Market a Price, P Price, P Price, P XS S- MD D+ 6123 4567 Quantity, O Quantity, O Quantity, C The left- and right-hand figures given above show the Home and Foreign markets for corn. The center figure shows the world corn market, containing Home's import demand (MD) and Foreign's export supply (XS) In the absence of both transportation costs and artificial trade barriers, the world corn market achieves equilibrium with A. the price at $6, trade volume at 2 million tons, and total world output at 10 million tons O B. the price at $6, trade volume at 2 million tons, and total world output at 8 million tons C. the price at S8, trade volume at 2 million tons, and total world output at 4 million tons. O D. the price at S6, trade volume at 2 million tons, and total world output at 5 million tons.

Explanation / Answer

The correct answer is B. This where demand equals supply and the total output is 8 million tons. The correct answer is B.

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