Figure 17-3

Multiple Choice

Figure 17-3
-In Figure 17-3, in the absence of trade, the domestic price of soybeans is P_n. If the world price of soybeans is P_w, which of the following will occur when the United States begins to trade internationally?

A) The domestic price of soybeans will rise, and domestic consumption will fall.
B) Both the domestic price of soybeans and domestic consumption will rise.
C) Both the domestic price of soybeans and domestic consumption will fall.
D) The domestic price of soybeans will fall, and domestic consumption will rise.