Question
please check circled answer,the numbers are in thousands, but it must be in millons, ANSWER ONLY IF YOU KNOW
5. Welfare effects of free trade in an exporting country Consider the New Zealand market for lemons. The folowing graph shows the domestic demand and domestic supply curves for lemons in New Zealand. Suppose New Zealand's gavernment currently does not allow the international trade in lemons Use the black point (plus symbal) to indicate the equilibrium price of a ton of lemons and the equinbrium quantity of lemons in New Zealand in the absence of international trade. Then, use the green point (triangle symbol) to shade the area representing consuner surplus in equilibrium. Finally use the purple point (diamond symbol) to shade the area representing producer surplus in equiibrium 1010 Domestic Demand Domestice Supply 940 870 800 No Trade Equilb esumer Surplus 660 590
Explanation / Answer
Total surplus = Consumer surplus + Producer surplus
= 1/2 x 125,000 x (1010 - 660) + 1/2 x 125,000 x (660 - 310)
= 21875000 + 21875000 = 43750000 or 43.75 million
