Figure 9-26 The diagram below illustrates the market for baseballs in the U.S Pr

Question

Figure 9-26 The diagram below illustrates the market for baseballs in the U.S Price 20 18 16 12 10 750 1000 250 2500 250 500 Quantity of Baseballs 23. Refer to figure 9-26. The figure shows that a. the U.S. will import baseballs when the market opens to international trade. b. the U.S. will export baseballs when the market opens to international trade. c. the U.S. will be a net loser when the market for baseballs opens to internationa d. if the U.S. opens its baseball market to international trade, the price will plumn

Explanation / Answer

The world price which is equal to 14 is greater than the autarkic equilibrium price which is equal to 10. Thus as U.S opens to trade there will be an incentive for the producers for baseball to sell at a higher price (that is the world price) than the equilibrium price. Thus the U.S will start exporting baseballs when the market opens to international trade.

The correct answer is, B. The U.S will export baseballs when the market opens to international trade.

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