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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 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 perton) 1100 Domestic Demand 1000 900 800 700 600 500 400 300 200 100 0 35 70 Domestic Supply 105 140 175 210 245 QUANTITY (Tons of limes) Therefore, South Africa will export 280 Pw 315 350 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. tons of limes.

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 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 perton) 1100 Domestic Demand 1000 900 800 700 600 500 400 300 200 100 0 35 70 Domestic Supply 105 140 175 210 245 QUANTITY (Tons of limes) Therefore, South Africa will export 280 Pw 315 350 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. tons of limes.

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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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 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 perton) 1100 Domestic Demand 1000 900 800 700 600 500 400 300 200 100 0 35 70 Domestic Supply 105 140 175 210 245 QUANTITY (Tons of limes) Consumer Surplus Producer Surplus 280 Pv W 315 350 Consumer Surplus Producer Surplus When South Africa allows free trade, the country's producer surplus by S (?) 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. + 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) by $ and consumer surplus Therefore, the net effect of allowing international trade on South Africa's total surplus is a F of
Transcribed Image Text: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 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 perton) 1100 Domestic Demand 1000 900 800 700 600 500 400 300 200 100 0 35 70 Domestic Supply 105 140 175 210 245 QUANTITY (Tons of limes) Consumer Surplus Producer Surplus 280 Pv W 315 350 Consumer Surplus Producer Surplus When South Africa allows free trade, the country's producer surplus by S (?) 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. + 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) by $ and consumer surplus Therefore, the net effect of allowing international trade on South Africa's total surplus is a F of
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 perton) 1100 Domestic Demand. 1000 900 800 700 600 500 400 300 200 100 0 35 Domestic Supply 70 105 140 175 210 245 QUANTITY (Tons of limes) 280 315 350 Equilibrium without Trade Consumer Surplus ☆ Producer Surplus Based on the information from the previous graph, absent international trade total surplus is ?
Transcribed Image Text: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 perton) 1100 Domestic Demand. 1000 900 800 700 600 500 400 300 200 100 0 35 Domestic Supply 70 105 140 175 210 245 QUANTITY (Tons of limes) 280 315 350 Equilibrium without Trade Consumer Surplus ☆ Producer Surplus Based on the information from the previous graph, absent international trade total surplus is ?
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