Question

Suppose Jordan is open to free trade in the world market for oranges. Because of Jordan's small size, the demand for and supply of oranges in Jordan do not affect the world price. The following graph shows the domestic oranges market in Jordan. The world price of oranges is Pw $800 per ton. 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 equilbrium. Then, use the purple triangle (diamond symbols) to shade the area representing producer surplus (PS). 1150 Domestic Demand Domestic Supply 1100 1050 cS 1000 950 PS 850 800 50t 700 650 0 5 10 15 20 25 30 35 40 45 5 QUANTITY (Tons of oranges)

Answer 1