The following figure shows the demand and supply for a commodity in the domestic U.S.market as well as the global market.The commodity is imported from the rest of the world to the U.S.market.
Figure 10-3
-In Figure 10-3,trade increases consumer surplus in the U.S.by _____.

Question

The following figure shows the demand and supply for a commodity in the domestic U.S.market as well as the global market.The commodity is imported from the rest of the world to the U.S.market.
Figure 10-3

-In Figure 10-3,trade increases consumer surplus in the U.S.by _____.

Quizplus · Accepted Answer

Trade increases consumer surplus by the area between the domestic price and the world price, up to the quantity consumed. In this case, it is represented by the area P₃EKP₂.

The Following Figure Shows the Demand and Supply for a Commodity