Suppose Jordan is open to free trade in the world market for maize. Since Jordan is small relative to the international market, the demand for and supply of maize in Jordan have no impact on the world price. The following graph shows the domestic market for maize in Jordan. The world price of a ton of maize is Pw = $800. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). ? PRICE (Dollars per ton) 1280 Domestic Demand Domestic Supply X 1220 1160 1100 1040 980 920 860 800 740 680 0 25 50 100 125 150 175 QUANTITY (Tons of maize) 75 Pw 200 225 250 CS PS Because Jordan participates in international trade in the market for maize, it will import tons of maize.

Suppose Jordan is open to free trade in the world market for maize. Since Jordan is small relative to the international market, the demand for and supply of maize in Jordan have no impact on the world price. The following graph shows the domestic market for maize in Jordan. The world price of a ton of maize is Pw = $800. On the following graph, use the green triangle (triangle symbols) to shade the area representing consumer surplus (CS) when the economy is at the free-trade equilibrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). ? PRICE (Dollars per ton) 1280 Domestic Demand Domestic Supply X 1220 1160 1100 1040 980 920 860 800 740 680 0 25 50 100 125 150 175 QUANTITY (Tons of maize) 75 Pw 200 225 250 CS PS Because Jordan participates in international trade in the market for maize, it will import tons of maize.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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