Market Demand for Domestic Products in an Open Economy | CFA Level 1 Exam Prep

Market Demand for Domestic Products in an Open Economy

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Question

In an open economy, the market demand for domestic products is

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A. B. C. D.

Explanation

The domestic producer can supply both the domestic consumer and consumers abroad. Thus, market demand, which is the addition of domestic and foreign demand, can be determined by finding the domestic demand (at the intersection of the domestic demand curve with the international price) and adding it to foreign demand (found in the same way with the demand curve for foreigners).