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Homework (Ch 09) 0 The following graph shows the domestic demand and domestic supply curves for tangerines in Panama. Suppose Panama'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 Panama in the absence of international trade. Then, use the green triangle ( triangle symbol) to shade the area representing consumer surplus in equilibrium. Final/y, use the purple triangle (diamond symbol) to shade the area representing producer surplus in equilibrium. _ 660 Domestic Demand Domestic Supply - -l- 620 . 580 Equmbrlum Without Trade A 540 h I: 2 a; 500 Consumer Surplus D. 92 g 460 O Q 8 '20 Producer Surplus E 0- 380 340 300 260 Homework (Ch 09) Based on the previous graph, total surplus in the absence of international trade is . The following graph shows the same domestic demand and supply curves for tangerines in Panama. Suppose that the Panamanian 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 Panama'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. Homework (Ch 09) Use the green triangle (triangle symbol) to shade consumer surplus, and then use the purple triangle (diamond symbol) to shade producer surplus. 360 Domestic Demand Domestic Supply L o 30 60 90 120 150 180 210 240 270 300 QUANTITY (Tons of tangerines) h Consumer Surplus 8 Producer Surplus 620 580 540 500 460 420 PRICE (Dollars per ton) 380 340 300 260 When Panama allows free trade of tangerines, the price of a ton of tangerines in Panama will be $500. At this price, tons of tangerines will be demanded in Panama, and tons will be supplied by domestic suppliers. Therefore, Panama will export tons of tangerines. 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 Panama allows free trade, the country's consumer surplus V by $ , and producer surplus V by. So, the net effect of international trade on Panama's total surplus is a V of . Grade-mow