The graph below refers to the market for beef in Japan.According to graph above, if trade in beef is allowed Japanese beef consumers:

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BlackTom AI · Accepted Answer

First, let's restate the scenario and what the graph shows about beef in Japan under autarky versus with trade. The graph indicates a domestic Japanese supply and demand for beef, with a world price line at $3. The autarky (no-trade) price, inferred from where supply and demand intersect domestically, is higher (around $5). When trade is allowed, the price in Japan moves toward the world price of $3, which is lower than the autarky price.

Option analysis:
- If trade is allowed and the world price is below the autarky price, consumers in Japan gain because they can purchase beef at a lower price. This raises consumer surplus.
- At the same time, beef producers in Japan lose because the lower world price reduces the price they can receive for their product, reducing producer surplus.
- In other words, imports increase since the world price is competitive with domestic production, shifting welfare toward consumers and away from domestic producers.

Since you cited the option: “c. will gain, and Japanese beef producers will lose,” this is consistent with the standard welfare effects of opening a closed economy to free trade when the world price is below the autarky price. The misalignment in prices drives the gain to consumers and the loss to producers, matching the classic analysis of trade liberalization effects.

Note: The provided data excerpt lacks the other answer choices, so this analysis focuses on the logic that under a world price of $3 (below the autarky price around $5), consumers gain and producers lose. If other options suggest different welfare outcomes (e.g., both gain, both lose, or only producers gain), they would conflict with the price-driven shift in surplus described above and would be incorrect in this context.

MCD2020 - T1 - 2025 Tutorial quiz 10 - International Trade and Labour Market

The graph below refers to the market for beef in Japan.According to graph above, if trade in beef is allowed Japanese beef consumers:

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