Question

please help with the whole problem. thank you

1. Welfare effects of free trade in an exporting country Consider the New Zealand market for lemons. The following graph shows the domestic demand and domestic supply curves for lemons in New Zealand. Suppose New Zealand'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 New Zealand 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. 1000 Domestic Demand Domestic Supply Equilibrium without Trade Consumer Surplus PRICE (Dollars per ton) Producer Surplus 0 15 30 120 135 150 45 60 75 90 105 QUANTITY (Tons of lemons) Based on the previous graph, total surplus in the absence of international trade is $ The following graph shows the same domestic demand and supply curves for lemons in New Zealand. Suppose that the New Zealand 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 New Zealand'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.

the first and second drop down menu has options of: increase or decrease. and the thrird drop down menu has an option of: gain or loss

Answer 1

100g soo . OS S 30 Oo Total susphes - 0.5 (75) C1000) = 1000+ gee .10.09 .. W o 30 de At this price 30 tons & 120 tons will be New Zealand will export demanded in New Zealand supplied ... Therefore 120-30 = 90 tons of lemons th Consumer surphs with free without free talle trade" 0.5l10oo-50o) 75 0.5 (1000-80.) 3 = 18750 = 3000 0.5 (500) 75 0.5(800) 120 = 18750 - 48000 Produces surples оид и е uр Схеаде. Би 18 Со - 30 00 = 15 2о Producer suxplus increases by 48000 - 18750 = 29250 Total suxplus is a not gain of 29250 - 15750-13500