Pleeeeeeeease!!!! Answe all the questions and do the graph very clear the the nu
ID: 1127691 • Letter: P
Question
Pleeeeeeeease!!!! Answe all the questions and do the graph very clear the the numbers also. Thank you.
. The effects of exports Aa Aa The following graph shows the domestic market for strawberries in Freedonia. In the absence of trade, the domestic rice of strawberries is $5 per pound and the equilibrium quantity is 4 million pounds per week. The world price of strawberries is $6 per pound. PRICE (Dollars per poundl Area Calculator Domesti Supply IDomestic QUANTITY IMillions of pounds per weekl Hl GLAM A Suppose Freedonia opens tself up to international trade. You can use the red quadrilateral (cross symbols) labeled Area Calculator" to determine changes in consumer and producer surplus that result graded on where you place the red quadrilateral on the graph. from free trade. You will not be At the world price of $6 per pound, Freedonia will pounds of strawberries per week. After trade, consumer surplus in Freedonia's strawberry market will by per week and per week Free trade total surplus in Freedonia's strawberry market by per week
Explanation / Answer
At the world price of $6, Freedonia will export (5-3) million = 2 million pounds of strawberries
Consumer surplus after trade will fall by [ 3*(6-5)+ 1/2*(6-5)
*(4-3)] = 3-0.5 =2.5
Producer surplus after trade will increase by [4*(6-5) + 1/2*(6-5)*(5-4)] = 4+0.5 = 4.5
Total welfare increases by [1/2*(5-3)*(6-5)] = $1 million