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In the small country of Agrolsland, the equilibrium price of wheat is $10 per bushel. Wheat is produced in a competitive industry. The world market
In the small country of Agrolsland, the equilibrium price of wheat is $10 per bushel. Wheat is produced in a competitive industry. The world market price of wheat is $20 per bushel. (a) Assume that Agrolsland currently does not engage in international trade in wheat. Draw a correctly labeled graph to illustrate the market for wheat in Agrolsland and indicate the following. (i) The equilibrium price, labeled $10 (ii) The equilibrium quantity, labeled Q* (iii) The domestic producer surplus, shaded completely and labeled PS (b) 0n the graph from part (a), show each of the following for Agrolsland if it engages in free trade in the world wheat market. (i) The world price of a bushel of wheat, labeled $20 (ii) The quantity of wheat supplied by domestic producers, labeled QP (iii) The domestic consumer surplus after trade, shaded completely and labeled CS (0) Given your answers in part (b), how does each of the following change if Agrolsland engages in international trade in the wheat market? (i) The domestic consumer surplus (ii) The domestic producer surplus
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