(Please show how to do graphs as well.) Consider the Jordanian market for orange
ID: 1207325 • Letter: #
Question
(Please show how to do graphs as well.)
Consider the Jordanian market for oranges. The following graph shows the domestic demand and domestic supply curves for oranges in Jordan. Suppose Jordan's government currently does not allow the international trade of oranges. Using the black point (X symbol), indicate the equilibrium price of a ton of oranges and the equilibrium quantity of oranges in Jordan in the absence of international trade. Dashed drop lines will automatically extend to both axes. Then use the green triangle (triangle symbols) to shade the area representing consumers' surplus (CS) in equilibrium. Finally, use the purple triangle (diamond symbols) to shade the area representing producers' surplus (PS) in equilibrium. Based on the prior graph, total surplus in the absence of international trade is__ million. The following graph again shows the domestic demand and domestic supply curves for oranges in Jordan. Suppose that the Jordanian government changes its international trade policy and Jordan now allows free trade in oranges. The world price of oranges is $420 per ton, as shown by the horizontal dashed line. Assume that Jordan's entry into the world market for oranges has no effect on the world price and there are no transportation or transaction costs associated with international trade in oranges. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. When free trade in oranges is allowed, the price of a ton of oranges in Jordan will be__. At this price,__tons of oranges will be demanded in Jordan, and__tons will be supplied by domestic suppliers. Therefore, Jordan will import__tons of oranges On the second graph showing the world price of oranges, use the green (triangle symbols) and purple (diamond symbols) triangles once again to show the consumers' and producers' surplus once Jordan allows free trade in oranges. Then, compare both graphs to complete the following table and analyze the welfare effects of allowing free trade. When Jordan allows free trade, the country's consumers' surplus__ by__ million, and producers' surplus__ by__ million. So the net effect of international trade on Jordan's total surplus is a__ of__ million.Explanation / Answer
1. $7.5
2. $420, 80000 tons demanded, 20000 supplied and 60000 will be imported
3. 15, 11.7, 7.5 , 6.3
4. increases , 7.5
5. decreases , 1.2, gain, 5.4
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