The figures below illustrate a situation of a trade embargo. In Figure (a) Dd and Sd are the domestic demand and supply curves of the embargoing countries. Prior to the embargo there was free trade at the world price of P0.
As a result of this embargo, the exporting countries not participating in the embargo gain Area
A. a.
B. b.
C. c.
D. (b + c).
Answer: B
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