B. %3D PRICE (Dollars per ton) Homework (Ch 09) Consider the Bolivian market for lemons. The following graph shows the domestic demand and domestic supply curves for lemons in Bolivia. Suppose Bolivia's government currently does not allow international trade in lemons. Use the black point (plus symbol) to indicate the equilibrium price of a ton of lemons and the equilibrium quantity of lemons in Bolivia 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. Domestic Demand Domestic Supply Equilibrium without Trade 006 Consumer Surplus 009 Producer Surplus 35 105 140 175 210 245 280 315 350 QUANTITY (Tons of lemons) Based on the previous graph, total surplus in the absence of international trade is $ MacBook Pro G Search or type URL +, R. H. P. 70 PRICE (Dollars per ton) The following graph shows the same domestic demand and supply curves for lemons in Bolivia. Suppose that the Bolivian government changes its international trade policy to allow free trade in lemons. The horizontal black line (Pw) represents the world price of lemons at $800 per ton. Assume that Bolivia's entry into the world market for lemons has no effect on the world price and there are no transportation or transaction costs associated with international trade in lemons. 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 consumer surplus, and then use the purple triangle (diamond symbol) to shade producer surplus. Domestic Demand Domestic Supply 000n Consumer Surplus 006 M. Producer Surplus 009 000 00 35 105 140 175 210 245 280 315 350 QUANTITY (Tons of lemons) When Bolivia allows free trade of lemons, the price of a ton of lemons in Bolivia will be $800. At this price, 40 tons of lemons will MacBook Pro G Search or type URL 9-