Based on the information from the previous graph, the absent international trade surplus is (_________). Part II. 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.Part III. Using the info from previous tasks, complete the following to analyze the welfare effect of allowing free trade: With free trade (dollars)Consumer Surplus=Producer Surplus= WIthout free trade (dollars)Consumer Surplus=Producer Surplus= 1. Welfare effects of free trade in an exporting countryThe following problem analyzes the South African market for limes.The graph below shows the domestic supply and demand curves for limes in South Africa. Assume that South Africa's government does not currentlypermit 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 withoutinternational trade. Next, use the green triangle (triangle symbol) to shade in the area that represents consumer surplus in equilibrium. Finally, usethe purple triangle (diamond symbol) to shade in the area that represents producer surplus in equilibrium.PRICE (Dollars per ton)100090080070060050040030020010000Domestic Demand+15 3045Domestic Supply106 120 135 15060 75 90QUANTITY (Tons of limes)Equilibrium without TradeConsumer SurplusProducer SurplusBased on the information from the previous graph, absent international trade total surplus is SThe following graph shows the same domestic supply and demand curves for limes in South Africa. Now, suppose that the South African governmentchanges 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 ortransaction costs associated with international trade in limes. Also assume that domestic suppliers will satisfy domestic demand as much possiblebefore 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) toshade in the area representing producer surplus.PRICE (Dollars per ton)1000 Domestic Demand90080070060050040030020010000153045Domestic Supply6075 90 106QUANTITY (Tons of limes)Consumer SurplusProducer Surplus120 135W150Consumer SurplusProducer SurplusWhen 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, andtons will be supplied by domestic suppliers.Therefore, South Africa will exporttons of limes.When South Africa allows free trade, the country's producer surplusby S?Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade.Without Free TradeWith Free Trade(Dollars)(Dollars)byand consumer surplusTherefore, the net effect of allowing international trade on South Africa's total surplus is aof

Question

Based on the information from the previous graph, the absent international trade surplus is (_________). Part II. 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.Part III. Using the info from previous tasks, complete the following to analyze the welfare effect of allowing free trade:  With free trade (dollars)Consumer Surplus=Producer Surplus= WIthout free trade (dollars)Consumer Surplus=Producer Surplus= 1. Welfare effects of free trade in an exporting countryThe following problem analyzes the South African market for limes.The graph below shows the domestic supply and demand curves for limes in South Africa. Assume that South Africa's government does not currentlypermit 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 withoutinternational trade. Next, use the green triangle (triangle symbol) to shade in the area that represents consumer surplus in equilibrium. Finally, usethe purple triangle (diamond symbol) to shade in the area that represents producer surplus in equilibrium.PRICE (Dollars per ton)100090080070060050040030020010000Domestic Demand+15 3045Domestic Supply106 120 135 15060 75 90QUANTITY (Tons of limes)Equilibrium without TradeConsumer SurplusProducer SurplusBased on the information from the previous graph, absent international trade total surplus is SThe following graph shows the same domestic supply and demand curves for limes in South Africa. Now, suppose that the South African governmentchanges 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 ortransaction costs associated with international trade in limes. Also assume that domestic suppliers will satisfy domestic demand as much possiblebefore 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) toshade in the area representing producer surplus.PRICE (Dollars per ton)1000 Domestic Demand90080070060050040030020010000153045Domestic Supply6075 90 106QUANTITY (Tons of limes)Consumer SurplusProducer Surplus120 135W150Consumer SurplusProducer SurplusWhen 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, andtons will be supplied by domestic suppliers.Therefore, South Africa will exporttons of limes.When South Africa allows free trade, the country's producer surplusby S?Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade.Without Free TradeWith Free Trade(Dollars)(Dollars)byand consumer surplusTherefore, the net effect of allowing international trade on South Africa's total surplus is aof

Accepted Answer

Domestic trade is purchasing and selling within one country, subject to national laws and using one…