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On the graph the supply in the Rest of the World has shifted from Sstart to S2 and the market in the Rest of the World has moved to a new short run equilibrium at B. The price of Good A is P1 in the U.S. and P2 in the Rest of the World. Which answer choices are correct from the image bellow?

On the graph the supply in the Rest of the World has shifted from Sstart to S2 and the market in the Rest of the World has moved to a new short run equilibrium at B. The price of Good A is P1 in the U.S. and P2 in the Rest of the World. Which answer choices are correct from the image bellow?

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter2: Economics: Eight Powerful Ideas
Section: Chapter Questions
Problem 15P
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This problem continues from the previous one.

On the graph the supply in the Rest of the World has shifted from Sstart to S2 and the market in the Rest of the World has moved to a new short run equilibrium at B.

The price of Good A is P1 in the U.S. and P2 in the Rest of the World.

Which answer choices are correct from the image bellow?

Because the price is different in the two markets, owners of the good have a personal financial incentive to move the good from the market where the price is high to the market where the price is low. O Owners of the good in the U.S. have an incentive to move the good to the Rest of the World. Owners of the good in the Rest of the World have an incentive to move the good to the United States.. O As the good is reallocated the supply curve in the U.S. will shift to the left. O As the good is reallocated the supply curve in the U.S. will shift to the right. The shift from Sstart to Są shows the good moving out of the U.S. due to the differential prices in the U.S. vs. the Rest of the World. O The shift from Sgtart to S4 shows the good moving into of the U.S. due to the differential prices in the U.S. vs. the Rest of the World. The shift from S2 to Sz shows the good moving out of the Rest of the World. O The shift from S2 to S3 shows the good moving into the Rest of the World. O The reallocation of the good from low to high valued area will continue until the price is the same in all markets. On the graph, the reallocation of the good from low to high valued area will stop when the price in both markets is P3.
Transcribed Image Text:Because the price is different in the two markets, owners of the good have a personal financial incentive to move the good from the market where the price is high to the market where the price is low. O Owners of the good in the U.S. have an incentive to move the good to the Rest of the World. Owners of the good in the Rest of the World have an incentive to move the good to the United States.. O As the good is reallocated the supply curve in the U.S. will shift to the left. O As the good is reallocated the supply curve in the U.S. will shift to the right. The shift from Sstart to Są shows the good moving out of the U.S. due to the differential prices in the U.S. vs. the Rest of the World. O The shift from Sgtart to S4 shows the good moving into of the U.S. due to the differential prices in the U.S. vs. the Rest of the World. The shift from S2 to Sz shows the good moving out of the Rest of the World. O The shift from S2 to S3 shows the good moving into the Rest of the World. O The reallocation of the good from low to high valued area will continue until the price is the same in all markets. On the graph, the reallocation of the good from low to high valued area will stop when the price in both markets is P3.
Good A Market in U.S. Good A Market in the Rest of the World Start Start S3 S4 P1 P1 S2 P3 P2 DStart DStart Q2 Q1
Transcribed Image Text:Good A Market in U.S. Good A Market in the Rest of the World Start Start S3 S4 P1 P1 S2 P3 P2 DStart DStart Q2 Q1
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