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A-Level Economics · World price above equilibrium (exports) diagram question
Why does domestic PRODUCTION expand when the country starts exporting?
The diagram
The answer
The higher world price causes an EXTENSION of supply along Sd, from Q₁ to Q₃. Price rises from P₁ to PW, so supply extends along Sd to Q₃. The curve itself never moves. The world sets a price above P₁. Higher price → EXTENSION of supply along Sd from Q₁ to Q₃ (point B), and a CONTRACTION of demand along Dd to Q₂ (point A). Movement along, not a shift — that distinction is worth marks in every trade answer you will write.
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