Use the data on the U.S. wholesale market for roses in Problem 1 to work this problem.

a. Explain who gains and who loses from free international trade in roses compared to a situation in which Americans buy only roses grown in the United States.

b. Draw a graph to illustrate the gains and losses from free trade.

c. Calculate the gain from international trade.

Problem 1

a. Without international trade, what would be the price of a container of roses and how many containers of roses a year would be bought and sold in the United States?

b. At the price in your answer to part (a), does the United States or the rest of the world have a comparative advantage in producing roses?

Wholesalers buy and sell roses in containers that hold 120 stems. The table provides information about the wholesale market for roses in the United States. The demand schedule is the wholesalers’ demand and the supply schedule is the U.S. rose growers’ supply.

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Price (dollars per container) 100 125 150 175 200 225 Quantity demanded Quantity supplied (millions of containers per year) 15 12 9 6 3 0 0 2 4 6 8 10