Use the green point (triangle symbol) to shade consumer surplus, and then use the purple point (diamond symbol) to shade producer surplus.550Domestic DemandDomestic SupplyA525Consumer Surplus500475450Producer Surplus425400375350P.3253004080120160200240280320360400QUANTITY (Thousands of tons of soybeans)When Venezuela allows free trade of soybeans, the price of a ton of soybeans in Venezuela will be $350. At this price,tons of soybeanswill be demanded in Venezuela, andtons will be supplied by domestic suppliers. Therefore, Venezuela will importtons ofsoybeans.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(Millions of dollars)(Millions of dollars)Consumer SurplusProducer SurplusWhen Venezuela allows free trade, the country's consumer surplusby $million, and producer surplusbymillion. So, the net effect of international trade on Venezuela's total surplus is amillion.PRICE (Dollars per tons) 3. Consumer surplus and producer surplus from market exchangeConsider the Venezuelan market for soybeans.The following graph shows the domestic demand and domestic supply curves for soybeans in Venezuela. Suppose Venezuela's government currentlydoes not allow the international trade in soybeans.Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity of soybeans in Venezuela in theabsence of international trade. Then, use the green point (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally,use the purple point (diamond symbol) to shade the area representing producer surplus in equilibrium.Note: Select and drag a fill area point from the palette to the graph. To fill in regions on the graph, merely drop the fill area point on the desiredregion.550Domestic DemandDomestic Supply525No Trade Equilibrium500A475450Consumer Surplus425400Producer Surplus3753503253004080120160200240280320360400QUANTITY (Thousands of tons of soybeans)Based on the previous graph, total surplus in the absence of international trade is $million.The following graph shows the same domestic demand and supply curves for soybeans in Venezuela. Suppose that the Venezuelan governmentchanges its international trade policy to allow the free trade of soybeans. The horizontal black line (Pw) represents the world price of soybeans at$350 per ton. Assume that Venezuela's entry into the world market for soybeans has no effect on the world price and there are no transportation ortransaction costs associated with international trade in soybeans. Also assume that domestic suppliers will satisfy domestic demand as much aspossible before any exporting or importing takes place.Use the green point (triangle symbol) to shade consumer surplus, and then use the purple point (diamond symbol) to shade producer surplus.PRICE (Dollars per ton)

Question

Accepted Answer

International trade refers to the exchange of goods and services across the world.
Import refers to…