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Georgia Military College *

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201

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Economics

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Nov 24, 2024

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On the following graph, use the green point (triangle symbol) to shade consumer surplus in Germany after China's clothing industry expands. Then use the purple point (diamond symbol) to shade producer surplus. Your Answer Correct Answer Market for Clothing in Germany Domestic Supply N Domestic Demand A y, Consumer Surplus \\ < E v g Producer Surplus G / 2 Q 5 g New World Price o | V. Quantity of Clothing Points: pm 1/ 1 Close Explanation ~ Explanation: Germany is an importer of clothing because the world price is below the equilibrium price in the domestic market. Consumer surplus is the difference between a buyer's willingness to pay (what the item is worth to the buyer) and what the buyer actually pays. Graphically, consumer surplus is equal to the area below the demand curve, above the world price, and to the left of the quantity of clothing demanded by domestic consumers. Producer surplus is the difference between a producer's willingness to sell (what the item costs the producer to make) and what the seller actually receives. Graphically, producer surplus is equal to the area above the supply curve, below the world price, and to the left of the quantity of clothing sold by domestic producers. See Section: The Gains and Losses of an Importing Country. Suppose the following graph represents the market of clothing in Cambodia prior to the expansion of China's clothing industry. Cambodia is an exporter ¥ of clothing because the world price is above V' the domestic equilibrium price. Points: IS 1/ 1 Use the green point (triangle symbol) to shade consumer surplus in Cambodia before China's clothing industry expands. Then use the purple point (diamond symbol) to shade producer surplus. ®@ Your Answer Correct Answer Market for Clothing in Cambodia

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