Question

Suppose the world price is​ $20. a. Is this country an exporter or an​ importer? A. exporter B. importer b. How many units of the good are​ exported/imported? nothing units c. Fill in the chart below. If your answer is​ negative, put a minus sign in front of the number. Area Before Trade Value After Trade Value Change Value Consumer Surplus ​$ nothing ​$ nothing ​$ nothing Producer Surplus ​$ nothing ​$ nothing ​$ nothing Total Welfare ​$ nothing ​$ nothing ​$ nothing d. Who gains when the country allows free international​ trade? A. consumers and the government B. consumers C. no one gains D. consumers and producers E. ​consumers, producers, and the government F. producers G. producers and the government H. the government Who loses from free trade in this​ case? A. the government B. no one gains C. consumers and the government D. producers E. consumers F. ​consumers, producers, and the government G. producers and the government H. consumers and producers ​Overall, is there a net gain or a net loss when the country moves from No Trade to Free​ Trade? A. net gain B. net loss What is the overall value of the gain or​ loss? ​$ nothing ​(if your answer is​ negative, put a minus sign before your​ answer).

Answer 1

Question Completion:

Answer:

1. This country is an

B. importer.

2. The units of the good that are exported/imported are 200.

3. Chart filling

Area                            Before Trade    After Trade     Change Value

                                           Value            Value  

Consumer Surplus ​          $4,000            $9,000                ​$5,000

Producer Surplus    ​         $4,000             ​$1,000              ​$−3,000

Total Welfare                   ​$8,000           ​$10,000                 ​$2,000

4. The group that gains when the country allows free international trade.

B. consumers

5. The group that loses from free trade in this case is:

D. producers

6. A. net gain

7. The overall value of the gain is $2,000

Explanation:

a) Data and Calculations:

Area                            Before Trade    After Trade     Change

                                       Value                  Value          Value  

Consumer Surplus ​          $?                          ​$?               ​$?

Producer Surplus    ​         $?                ​          ​$?               ​$?

Total Welfare                   ​$ ?                        ​ ​ $?                 ​$?

Consumer surplus = Total quantity demanded at consumer's price minus equilibrium quantity * equilibrium price

Producer surplus = Total quantity supplied at supplier's price minus equilibrium quantity * equilibrium price

Change value at consumer surplus = $5,000 ($9,000 - $4,000)

Change value at producer surplus = $-3,000 ($1,000 - $4,000)

Total welfare before trade = $8,000 ($4,000 + $4,000)

Total welfare after trade = $10,000 ($9,000 + $1,000)

The net gain from free international trade is the difference between the total welfare value after trade and before trade = $2,000 ($10,000 - $8,000)