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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=

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=

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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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 country The 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 currently permit 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 without international trade. Next, use the green triangle (triangle symbol) to shade in the area that represents consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade in the area that represents producer surplus in equilibrium. PRICE (Dollars per ton) 1000 900 800 700 600 500 400 300 200 100 0 0 Domestic Demand + 15 30 45 Domestic Supply 106 120 135 150 60 75 90 QUANTITY (Tons of limes) Equilibrium without Trade Consumer Surplus Producer Surplus Based on the information from the previous graph, absent international trade total surplus is S The following graph shows the same domestic supply and demand curves for limes in South Africa. Now, suppose that the South African government changes 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 or transaction costs associated with international trade in limes. Also assume that domestic suppliers will satisfy domestic demand as much possible before any exporting or importing takes place.
Transcribed Image Text:1. Welfare effects of free trade in an exporting country The 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 currently permit 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 without international trade. Next, use the green triangle (triangle symbol) to shade in the area that represents consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade in the area that represents producer surplus in equilibrium. PRICE (Dollars per ton) 1000 900 800 700 600 500 400 300 200 100 0 0 Domestic Demand + 15 30 45 Domestic Supply 106 120 135 150 60 75 90 QUANTITY (Tons of limes) Equilibrium without Trade Consumer Surplus Producer Surplus Based on the information from the previous graph, absent international trade total surplus is S The following graph shows the same domestic supply and demand curves for limes in South Africa. Now, suppose that the South African government changes 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 or transaction costs associated with international trade in limes. Also assume that domestic suppliers will satisfy domestic demand as much 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) 1000 Domestic Demand 900 800 700 600 500 400 300 200 100 0 0 15 30 45 Domestic Supply 60 75 90 106 QUANTITY (Tons of limes) Consumer Surplus Producer Surplus 120 135 W 150 Consumer Surplus Producer Surplus 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. When South Africa allows free trade, the country's producer surplus by S ? Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade. Without Free Trade With Free Trade (Dollars) (Dollars) by and consumer surplus Therefore, the net effect of allowing international trade on South Africa's total surplus is a of
Transcribed Image Text: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) 1000 Domestic Demand 900 800 700 600 500 400 300 200 100 0 0 15 30 45 Domestic Supply 60 75 90 106 QUANTITY (Tons of limes) Consumer Surplus Producer Surplus 120 135 W 150 Consumer Surplus Producer Surplus 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. When South Africa allows free trade, the country's producer surplus by S ? Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade. Without Free Trade With Free Trade (Dollars) (Dollars) by and consumer surplus Therefore, the net effect of allowing international trade on South Africa's total surplus is a of
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