Based on the information from the previous graph, absent international trade total surplus is $ The following graph shows the same domestic supply and demand curves for lemons in Jordan. Now, suppose that the Jordanian government changes. its stance on international trade, deciding to allow free trade in lemons. The horizontal black line (Pw) represents the world price of lemons at $700 per ton. Assume that Jordan's entry into the world market for lemons has no effect on the world price and there are no transportation or transaction costs associated with international trade in lemons. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the green triangle (triangle symbol) to shade in the area representing consumer surplus, and then use the purple triangle (diamond symbol) to shade in the area representing producer surplus.

Based on the information from the previous graph, absent international trade total surplus is $ The following graph shows the same domestic supply and demand curves for lemons in Jordan. Now, suppose that the Jordanian government changes. its stance on international trade, deciding to allow free trade in lemons. The horizontal black line (Pw) represents the world price of lemons at $700 per ton. Assume that Jordan's entry into the world market for lemons has no effect on the world price and there are no transportation or transaction costs associated with international trade in lemons. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the green triangle (triangle symbol) to shade in the area representing consumer surplus, and then use the purple triangle (diamond symbol) to shade in the area representing producer surplus.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 2PA

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