1. Welfare effects of free trade in an exporting country Consider the Honduran market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Honduras. Suppose Honduras's government currently does not allow international trade in soybeans. Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity of soybeans in Honduras in the absence of international trade. Then, use the green triangle (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium. (?) 410 Domestic Demand Domestic Supply -+ Equilibrium without Trade 370 350 330 Consumer Surplus 310 PRICE (Dollars per ton) 290 Producer Surplus 270 250 200 210 35 70 106 140 176 210 245 280 315 350 QUANTITY (Tons of soybeans) Based on the previous graph, total surplus in the absence of international trade is |S The following graph shows the same domestic demand and supply curves for soybeans in Honduras. Suppose that the Honduran government changes its international trade policy to allow free trade in soybeans. The horizontal black line (Pw) represents the world price of soybeans at $350 per ton. Assume that Honduras's entry into the world market for soybeans has no effect on the world price and there are no transportation or transaction costs associated with international trade in soybeans. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place.Use the green triangle (triangle symbol) to shade consumer surplus, and then use the purple triangle (diamond symbol) to shade producer surplus. (?) 410 Domestic Demand Domestic Supply 980 Consumer Surplus 370 FW 330 Producer Surplus PRICE (Dollars per ton) 310 290 270 250 230 210 35 70 105 140 175 210 245 280 315 350 QUANTITY (Tons of soybeans) When Honduras allows free trade of soybeans, the price of a ton of soybeans in Honduras will be $350. At this price, tone of soybeans will be demanded in Honduras, and tons will be supplied by domestic suppliers. Therefore, Honduras will export tons of soybeans. Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade. Without Free Trade With Free Trade (Dollars (Dollars Consumer Surplus Producer Surplus When Honduras allows free trade, the country's consumer surplus by S and producer surplus by $ J. So, the net effect of international trade on Honduras's total surplus is a of Grade It Now Save & Continue Continue without saving