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Figure 9-5 A graph of price, P, versus quantity, Q, shows a supply curve, Domestic Supply, rising linearly, and a demand curve, Domestic Demand, descending
Figure 9-5 A graph of price, P, versus quantity, Q, shows a supply curve, Domestic Supply, rising linearly, and a demand curve, Domestic Demand, descending linearly. A horizontal line, World Price, extends from P subscript 1. Area A lies to the upper left of the point of intersection, below the demand curve and above the supply curve. Area B lies below Area A and above the World Price line. Area C lies below the World Price line and above the supply curve. Area D lies below the point of intersection and above the World Price line. Refer to Figure 9-5. Producer surplus plus consumer surplus in this market before trade is a. A + B. b. A + B + C + D. c. B + C + D. d. A + B + C
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