6. Imports and Exports

When China's clothing industry expands, the increase in world supply lowers the world price of clothing. Consider the effects this has on both an importer and an exporter of clothing.

Suppose the following graph represents the market for clothing in Pakistan prior to the expansion of China's clothing industry. Pakistan is an________(exporter, importer) of clothing because the world price is______(below, above) the domestic equilibrium price.

Note: You will have to use green points (triangle symbol) and purple points (diamond symbol) to shade the consumer and producer surplus areas on the following graphs. There are two green points and two purple points per graph. Use either one point of both to most accurately indicate the areas. For example, if indicating the consumer surplus requires only one green point, leave the second one on the palette.

Use the green point (triangle symbol) to shade consumer surplus in Pakistan before China's clothing industry expands. Then use the purple point (diamond symbol) to shade producer surplus.