Suppose the Domestic Supply (Q^S_{U Demand (Q^D) and Supply (Q^S) in the Rest of the the United}

Multiple Choice

Suppose the domestic supply (Q^S_U.S.) and demand (Q^D_U.S) for bicycles in the United States are given by the following set of equations: $$\begin{array} { l } Q ^ { \mathrm { S } } \mathrm { U.S } . = 2 \mathrm { P } \\\mathrm { Q } _ { ^\mathrm { D } U . S } = 200 - 2 \mathrm { P } .\end{array}$$ Demand (Q^D) and supply (Q^S) in the Rest of the World are given by the equations: $$\begin{array} { l } Q ^ { S } = P \\Q ^ { D } = 160 - P .\end{array}$$ Quantities are measured in thousands and price in U.S. dollars. After the opening of free trade between the U.S. and the Rest of the World:

A) neither the U.S.nor the Rest of the World gain from trade.
B) both countries gain from trade, but the U.S.gains more than the Rest of the World.
C) both countries gain from trade, but the Rest of the World gains more than the U.S.
D) the net change in total surplus in the U.S.is zero but the Rest of the World gains.