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PRICE 380 340 300 260 0 45 90 135 180 225 270 315 360 405 450 QUANTITY (Tons of melons) When Bangladesh adjusts its trade policy to allow free trade of melons, the price of one ton of melons in Bangladesh becomes $500. At this price, tons of melons will be demanded in Bangladesh, and tons will be supplied by domestic suppliers. Therefore, Bangladesh will export tons of melons. 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 When Bangladesh allows free trade, the country's producer surplus by by $ ' and consumer surplus Therefore, the net effect of allowing international trade on Bangladesh's total surplus is a of 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 melons in Bangladesh. Now, suppose that the Bangladeshi government changes its stance on international trade, deciding to allow free trade in melons. The horizontal black line (Pw) represents the world price of melons at $500 per ton. Assume that Bangladesh's entry into the world market for melons has no effect on the world price and there are no transportation or transaction costs associated with international trade in melons. Also assume that domestic suppliers will satisfy domestic demand as much as possible before 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) to shade in the area representing producer surplus. PRICE (Dollars per ton) 660 Domestic Demand Domestic Supply 620 580 540 500 460 420 380 340 Consumer Surplus Producer Surplus Pw ?

PRICE 380 340 300 260 0 45 90 135 180 225 270 315 360 405 450 QUANTITY (Tons of melons) When Bangladesh adjusts its trade policy to allow free trade of melons, the price of one ton of melons in Bangladesh becomes $500. At this price, tons of melons will be demanded in Bangladesh, and tons will be supplied by domestic suppliers. Therefore, Bangladesh will export tons of melons. 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 When Bangladesh allows free trade, the country's producer surplus by by $ ' and consumer surplus Therefore, the net effect of allowing international trade on Bangladesh's total surplus is a of 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 melons in Bangladesh. Now, suppose that the Bangladeshi government changes its stance on international trade, deciding to allow free trade in melons. The horizontal black line (Pw) represents the world price of melons at $500 per ton. Assume that Bangladesh's entry into the world market for melons has no effect on the world price and there are no transportation or transaction costs associated with international trade in melons. Also assume that domestic suppliers will satisfy domestic demand as much as possible before 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) to shade in the area representing producer surplus. PRICE (Dollars per ton) 660 Domestic Demand Domestic Supply 620 580 540 500 460 420 380 340 Consumer Surplus Producer Surplus Pw ?

Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: Application: International Trade
Section: Chapter Questions
Problem 1PA
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PRICE 380 340 300 260 0 45 90 135 180 225 270 315 360 405 450 QUANTITY (Tons of melons) When Bangladesh adjusts its trade policy to allow free trade of melons, the price of one ton of melons in Bangladesh becomes $500. At this price, tons of melons will be demanded in Bangladesh, and tons will be supplied by domestic suppliers. Therefore, Bangladesh will export tons of melons. 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 When Bangladesh allows free trade, the country's producer surplus by by $ ' and consumer surplus Therefore, the net effect of allowing international trade on Bangladesh's total surplus is a of
Transcribed Image Text:PRICE 380 340 300 260 0 45 90 135 180 225 270 315 360 405 450 QUANTITY (Tons of melons) When Bangladesh adjusts its trade policy to allow free trade of melons, the price of one ton of melons in Bangladesh becomes $500. At this price, tons of melons will be demanded in Bangladesh, and tons will be supplied by domestic suppliers. Therefore, Bangladesh will export tons of melons. 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 When Bangladesh allows free trade, the country's producer surplus by by $ ' and consumer surplus Therefore, the net effect of allowing international trade on Bangladesh's total surplus is a of
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 melons in Bangladesh. Now, suppose that the Bangladeshi government changes its stance on international trade, deciding to allow free trade in melons. The horizontal black line (Pw) represents the world price of melons at $500 per ton. Assume that Bangladesh's entry into the world market for melons has no effect on the world price and there are no transportation or transaction costs associated with international trade in melons. Also assume that domestic suppliers will satisfy domestic demand as much as possible before 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) to shade in the area representing producer surplus. PRICE (Dollars per ton) 660 Domestic Demand Domestic Supply 620 580 540 500 460 420 380 340 Consumer Surplus Producer Surplus Pw ?
Transcribed Image Text: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 melons in Bangladesh. Now, suppose that the Bangladeshi government changes its stance on international trade, deciding to allow free trade in melons. The horizontal black line (Pw) represents the world price of melons at $500 per ton. Assume that Bangladesh's entry into the world market for melons has no effect on the world price and there are no transportation or transaction costs associated with international trade in melons. Also assume that domestic suppliers will satisfy domestic demand as much as possible before 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) to shade in the area representing producer surplus. PRICE (Dollars per ton) 660 Domestic Demand Domestic Supply 620 580 540 500 460 420 380 340 Consumer Surplus Producer Surplus Pw ?
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