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Figure 9-4 A graph of price, P, versus quantity, Q, shows a supply curve, Domestic Supply, rising linearly, and a demand curve, Domestic Demand, descending
Figure 9-4 A graph of price, P, versus quantity, Q, shows a supply curve, Domestic Supply, rising linearly, and a demand curve, Domestic Demand, descending linearly. The curves intersect at P subscript 1. A horizontal line, World Price, extends from P subscript 0. Area A lies below the demand curve and above the World Price line. Area B lies to the upper left of the point of intersection, below the world price line and the demand curve. Area C lies below Area B and above the supply curve. Area D lies below the World Price line and above the equilibrium price. Refer to Figure 9-4. When the country for which the figure is drawn allows international trade in crude oil, a. consumer surplus changes from the area A + B + D to the area A. b. consumer surplus changes from the area A to the area A + B. c. total surplus decreases by the area D. d. producer surplus changes from the area C to the area B + C + D
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