Question

INTERNATIONAL TRADE WORKSHEET 2 Below, you are provided with the demand and supply curves for orange juice. You will use this information to identify whether the country imports or exports orange juice. You will also determine whether producers and/or consumers win by engaging in international trade. $7 Price (per gallon) $6 Supply $5 $4 $3 $2 $1 Demand 30 60 210 90 120 150 180 Quantity of Orange Juice (in gallons)

Answer 1

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As HOMEWORKLIB Guidelines, i can answer 4 subparts/questions at a time, Thank you

Solution,

Part 1

equilibrium price decided when demand and supply becomes equal

demand and supply equal when Price becomes $3 and quantity becomes 60

Equilibrium price is $3 and Equilibrium quantity is 60 gallons

Part 2

Consumer Surplus is black shaded reason in the diagram

black shaded area = 1/2(60*4) = 240/2 = 120

Part 3

Producer Surplus is grey shaded reason in the diagram

grey shaded area = 1/2(60*2) = 120/2 = 60

Part 4

when world price for orange is $5

Domestic Supply = 120 gallons

Domestic Demand = 30

Domestic supply is greater than Domestic demand, so country will export

Export = domestic supply - domestic demand = 120 - 30 = 90 gallons

As HOMEWORKLIB Guidelines, i can answer 4 subparts/questions at a time, Thank you