When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing. Suppose the following graph represents the market for clothing in Germany prior to the expansion of China's clothing industry. Germany is an (IMPORTER OR EXPORTER)   of clothing because the world price is  (ABOVE OR BELOW)  the domestic equilibrium price.

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter3: Market Demand And Supply
Section3.7: A Market Supply And Demand Analysis
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When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing.
Suppose the following graph represents the market for clothing in Germany prior to the expansion of China's clothing industry. Germany is an (IMPORTER OR EXPORTER)   of clothing because the world price is  (ABOVE OR BELOW)  the domestic equilibrium price.
Use the green point (triangle symbol) to shade consumer surplus in the Germany before China's clothing industry expands. Then use the purple point
(diamond symbol) to shade producer surplus.
Market for Clothing in Germany
Domestic Supoly
Domestc Demand
Consumer Surplus
Producer Surplus
World Price
Quantity of Ciothing
Price of Clothing
Transcribed Image Text:Use the green point (triangle symbol) to shade consumer surplus in the Germany before China's clothing industry expands. Then use the purple point (diamond symbol) to shade producer surplus. Market for Clothing in Germany Domestic Supoly Domestc Demand Consumer Surplus Producer Surplus World Price Quantity of Ciothing Price of Clothing
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