the graph above shows the domestic market for sandalwood in equilibrium at a price of $800 per kilogram in the absence of international trade. now assume the country begins to engage in international trade, and sandalwood is selling at a price of $600 per kilogram in the world market. which of the following would most likely result?

I looked for a similar question in order to get the graph and found the missing options also:

A) The country would increase domestic production to become competitive in the world market.B) The country would export sandalwood, and its domestic consumer surplus would increase.C) The country would export sandalwood, and its total surplus would increase, with the domestic consumer surplus increasing by more than the domestic producer surplus decreases.D) The country would import sandalwood, and its total surplus would decrease, with both the domestic consumer surplus and the domestic producer surplus decreasing.E) The country would import sandalwood, and its total surplus would increase, with the domestic consumer surplus increasing by more than the domestic producer surplus decreases.

Options A, B and C are completely wrong, since the country would start importing sandalwood since the world price is lower until equilibrium is reached at $600 per kilogram.

That leaves us with options D and E. Option D must be ruled out because consumer surplus will increase while producer surplus will decrease.

The only option left is E:

sandalwood would be importeddomestic surplus increasessupplier surplus decreases