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Consider the Sudanese market for tangerines. The following graph shows the domestic demand and domestic supply curves for tangerines in Sudan. Suppose Sudan's government
Consider the Sudanese market for tangerines. The following graph shows the domestic demand and domestic supply curves for tangerines in Sudan. Suppose Sudan's government currently does not allow international trade in tangerines. Use the black point (plus symbol) to indicate the equilibrium price of a ton of tangerines and the equilibrium quantity of tangerines in Sudan 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. PRICE (Dollars per tor 320 + 25 50 75 100 125 150 175 200 225 250 QUANTITY (Tons of tangerines) 350 380 410 440 Domestic Demand Domestic Supply 470 500 530 560 580 620 Equilibrium without Trade Consumer Surplus +Ad Producer Surplus 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 tangerines in Sudan. Suppose that the Sudanese government changes its international trade policy to allow free trade in tangerines. The horizontal black line (Pw) represents the world price of tangerines at $500 per ton. Assume that Sudan's entry into the world market for tangerines has no effect on the world price and there are no transportation or transaction costs associated with international trade in tangerines. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place
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