Use the black point (plus symbol) to indicate the equilibrium price of a ton of tangerines and the equilibrium quantity of tangerines in Guatemala in the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium.

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Chapter9: Application: International Trade
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1. Welfare effects of free trade in an exporting country
Consider the Guatemalan market for tangerines.
The following graph shows the domestic demand and domestic supply curves for tangerines in Guatemala. Suppose Guatemala's government currently
does not allow international trade in tangerines.
Use the black point (plus symbol) to indicate the equilibrium price of a ton of tangerines and the equilibrium quantity of tangerines in Guatemala in
the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium.
Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium.
(?
620
Domestic Demand
Domestic Supply
590
Equilibrium without Trade
580
530
Consumer Surplus
500
470
440
Producer Surplus
410
380
350
320
25
50
75
100
125
150
175 200 225 250
QUANTITY (Tons of tangerines)
Based on the previous graph, total surplus in the absence of international trade is S
PRICE (Dollars per ton)
Transcribed Image Text:1. Welfare effects of free trade in an exporting country Consider the Guatemalan market for tangerines. The following graph shows the domestic demand and domestic supply curves for tangerines in Guatemala. Suppose Guatemala's government currently does not allow international trade in tangerines. Use the black point (plus symbol) to indicate the equilibrium price of a ton of tangerines and the equilibrium quantity of tangerines in Guatemala in the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium. (? 620 Domestic Demand Domestic Supply 590 Equilibrium without Trade 580 530 Consumer Surplus 500 470 440 Producer Surplus 410 380 350 320 25 50 75 100 125 150 175 200 225 250 QUANTITY (Tons of tangerines) Based on the previous graph, total surplus in the absence of international trade is S PRICE (Dollars per ton)
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