5 3 2 A B D F G I 8 11 S 7) Use the graph above to answer this question. Initially, Spartania is an autarchy and there is no international trade allowed. Then, the country decides to allow free trade. The world price is $2. Which of the following areas best represents the additional economic surplus created when free trade is permitted? A) G+H B) I C) C+E D) A+B+C E) D+F+E+G+H

5 3 2 A B D F G I 8 11 S 7) Use the graph above to answer this question. Initially, Spartania is an autarchy and there is no international trade allowed. Then, the country decides to allow free trade. The world price is $2. Which of the following areas best represents the additional economic surplus created when free trade is permitted? A) G+H B) I C) C+E D) A+B+C E) D+F+E+G+H

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

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bottom half When Venezuela allows free trade of soybeans, the price of a ton of soybeans in Venezuela will be $350. At this price, tons of soybeans will be demanded in Venezuela, and tons will be supplied by domestic suppliers. Therefore, Venezuela will export tons of soybeans. Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade. Without Free Trade With Free Trade (Dollars) (Dollars) Consumer Surplus Producer Surplus When Venezuela allows free trade, the country's consumer surplus decrease or increase by , and producer surplus decrease or increase by . So, the net effect of international trade on Venezuela's total surplus is a loss or gain of .
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