Use the green triangle (triangle symbol) to shade in the area representing consumer surplus, and then use the purple triang shade in the area representing producer surplus PRICE (Dollars per on) 300 800 100 Domestic Demand Domestic Supply P 50 100 150 200 250 300 350 400 450 500 QUANTITY (Tons of times) 20 Consumer Surplus Producer Surplus ? When South Africa adjusts its trade policy to allow free trade of limes, the price of one ton of limes in South Africa becomes $800. At this price, tons will be supplied by domestic suppliers. tons of limes will be demanded in South Africa, and [ Therefore, South Africa will export tons of limes. 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 by S , and consumer surplus . Therefore, the net effect of allowing international trade on South Africa's total surplus is a of When South Africa allows free trade, the country's producer surplus by S

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Chapter1: Making Economics Decisions
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Use the green triangle (triangle symbol) to shade in the area representing consumer surplus, and then use the purple triangle
shade in the area representing producer surplus.
PRICE (Dollars per ton)
1000 Domestic Demand
900
800
700
600
500
400
300
200
100
0
0
Domestic Supply
50 100 150 200 250 300 350
QUANTITY (Tons of limes)
Pw
400 450 500
Consumer Surplus
Producer Surplus
When South Africa adjusts its trade policy to allow free trade of limes, the price of one ton of limes in South Africa becomes $800. At this price,
tons of limes will be demanded in South Africa, and
tons will be supplied by domestic suppliers.
Therefore, South Africa will export
tons of limes.
Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade.
With Free Trade
(Dollars)
Without Free Trade
(Dollars)
Consumer Surplus
Producer Surplus
by $
and consumer surplus
Therefore, the net effect of allowing international trade on South Africa's total surplus is a
When South Africa allows free trade, the country's producer surplus
by $
of
Transcribed Image Text:Use the green triangle (triangle symbol) to shade in the area representing consumer surplus, and then use the purple triangle shade in the area representing producer surplus. PRICE (Dollars per ton) 1000 Domestic Demand 900 800 700 600 500 400 300 200 100 0 0 Domestic Supply 50 100 150 200 250 300 350 QUANTITY (Tons of limes) Pw 400 450 500 Consumer Surplus Producer Surplus When South Africa adjusts its trade policy to allow free trade of limes, the price of one ton of limes in South Africa becomes $800. At this price, tons of limes will be demanded in South Africa, and tons will be supplied by domestic suppliers. Therefore, South Africa will export tons of limes. Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade. With Free Trade (Dollars) Without Free Trade (Dollars) Consumer Surplus Producer Surplus by $ and consumer surplus Therefore, the net effect of allowing international trade on South Africa's total surplus is a When South Africa allows free trade, the country's producer surplus by $ of
The graph below shows the domestic supply and demand curves for limes in South Africa. Assume that South Africa's government does not currently
permit international trade in limes.
Use the black point (plus symbol) to denote the equilibrium price of one ton of limes and the equilibrium quantity of limes in South Africa without
international trade. Next, use the green triangle (triangle symbol) to shade in the area that represents consumer surplus in equilibrium. Finally, use
the purple triangle (diamond symbol) to shade in the area that represents producer surplus in equilibrium.
PRICE (Dollars per ton)
1000
900
800
700
600
500
400
300
200
100
0
0
Domestic Demand
Domestic Supply
50 100 150 200 250 300 350 400
QUANTITY (Tons of limes)
450
500
+
Equilibrium without Trade
Consumer Surplus
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 limes in South Africa. Now, suppose that the South African government
changes its stance on international trade, deciding to allow free trade in limes. The horizontal black line (Pw) represents the world price of limes at
$800 per ton. Assume that South Africa's entry into the world market for limes has no effect on the world price and there are no transportation or
transaction costs associated with international trade in limes. Also assume that domestic suppliers will satisfy domestic demand as much as possible
before any exporting or importing takes place.
Transcribed Image Text:The graph below shows the domestic supply and demand curves for limes in South Africa. Assume that South Africa's government does not currently permit international trade in limes. Use the black point (plus symbol) to denote the equilibrium price of one ton of limes and the equilibrium quantity of limes in South Africa without international trade. Next, use the green triangle (triangle symbol) to shade in the area that represents consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade in the area that represents producer surplus in equilibrium. PRICE (Dollars per ton) 1000 900 800 700 600 500 400 300 200 100 0 0 Domestic Demand Domestic Supply 50 100 150 200 250 300 350 400 QUANTITY (Tons of limes) 450 500 + Equilibrium without Trade Consumer Surplus 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 limes in South Africa. Now, suppose that the South African government changes its stance on international trade, deciding to allow free trade in limes. The horizontal black line (Pw) represents the world price of limes at $800 per ton. Assume that South Africa's entry into the world market for limes has no effect on the world price and there are no transportation or transaction costs associated with international trade in limes. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.
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