Scenario 2.2: Suppose the domestic supply (Qs) and demand (Qd) for MP3 players in the United States are given by the following set of equations.
Qs = -25 + 10p
Qd = 875 - 5p
1. Refer to scenario 2.2. In the absence of international trade in MP3 players, what will be the price of MP3 players in the United States?
a. $60 b. $65 c. $90 d. $70
2. In the absence of international trade in MP3 players, how many MP3 players will be sold in the United States?
a. 825 b. 575 c. 608 d. 925
3. If the United States can import MP3 players from the rest of the world at a per unit price of $50, how many MP3 players will be produced in the United States?
a. 625 b. 475 c. 925 d. 525
4. If the United States can import MP3 players from the rest of the world at a per unit price of $50, what will be the total demand for MP3 players in the United States?
a. 625 b. 475 c. 925 d. 550
5. If the U.S engages in free trade and the international price of MP3 players is $50, it would import ____ MP3 players from the rest of the world.
a. 150 b. 250 c. 475 d. 225
6. In the absence of trade with the rest of the world, the consumer surplus in the United States MP3 player market is ___.
a. $22,562.50 b. $30,062.50 c. $33,062.50 d. $19,500.00
7. The consumer surplus will _____ by ______ when the United States engages in international trade and the international price for MP3 players settles at $50.
a. increase; $2,625 b. increase $6,000 c. decrease; $7,150 d. decrease; $13,500