PRICE (Dollars per tonne)800 Domestic Demand7507006506005505004504003503000Domestic Supply40 80 120 160 200 240 280 320 360 400QUANTITY (Thousands of tonnes of tangerines)No Trade EquilibriumAConsumer Surplus◇Producer SurplusBased on the previous graph, total surplus in the absence of international trade isthe graph.)$25 million. (Hint: Take note of the units on the axes ofThe following graph shows the same domestic demand and supply curves for tangerines in Guatemala presented in the previous graph. Suppose thatthe Guatemalan government changes its international trade policy to allow free trade in tangerines. The horizontal black line (Pw) represents theworld price of tangerines at $500 per tonne. Assume that Guatemala's entry into the world market for tangerines has no effect on the world price andthat there are no transportation or transaction costs associated with international trade in tangerines. Also assume that domestic suppliers will satisfydomestic demand as much as possible before any exporting or importing takes place.

Total surplus, also known as social surplus or economic surplus, represents the overall welfare or…

PRICE (Dollars per tonne) 800 Domestic Demand 750 700 650 600 550 500 450 400 350 300 Domestic Supply 040 80 120 160 200 240 280 320 360 400 QUANTITY (Thousands of tonnes of tangerines) + No Trade Equilibrium A Consumer Surplus ◇ Producer Surplus Based on the previous graph, total surplus in the absence of international trade is the graph.) $25 million. (Hint: Take note of the units on the axes of

PRICE (Dollars per tonne) 800 Domestic Demand 750 700 650 600 550 500 450 400 350 300 Domestic Supply 040 80 120 160 200 240 280 320 360 400 QUANTITY (Thousands of tonnes of tangerines) + No Trade Equilibrium A Consumer Surplus ◇ Producer Surplus Based on the previous graph, total surplus in the absence of international trade is the graph.) $25 million. (Hint: Take note of the units on the axes of

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter19: International Trade

Section: Chapter Questions

Problem 2.5P

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