Suppose the before-trade domestic price of natural gas in Australia is $15 per kg. The world price of natural gas is $30 per kg. Australia is a price-taker in the natural gas market.
-According to this statement, if trade in natural gas is allowed, total wellbeing in Australia:

Question

Quizplus · Accepted Answer

If trade is allowed, Australia will export natural gas at the world price of $30 per kg. This is higher than the domestic price of $15 per kg. Therefore, producers in Australia will benefit from the increased price and increase their production, leading to an increase in total wellbeing. Consumers in Australia, however, will face higher prices due to the increase in the domestic price. However, the benefits to producers will outweigh the losses to consumers, leading to an overall increase in total wellbeing.

Suppose the Before-Trade Domestic Price of Natural Gas in Australia