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ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
Edition 6ISBN: 978-1133150558ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
Edition 6ISBN: 978-1133150558 Exercise 1
Mexico represents a small part of the world orange market.
a. Draw a diagram depicting the equilibrium in the Mexican orange market without international trade. Identify the equilibrium price, equilibrium quantity, consumer surplus, and producer surplus.
b. Suppose that the world orange price is below the Mexican price before trade and that the Mexican orange market is now opened to trade. Identify the new equilibrium price, quantity consumed, quantity produced domestically, and quantity imported. Also show the change in the surplus of domestic consumers and producers. Has total surplus increased or decreased?
a. Draw a diagram depicting the equilibrium in the Mexican orange market without international trade. Identify the equilibrium price, equilibrium quantity, consumer surplus, and producer surplus.
b. Suppose that the world orange price is below the Mexican price before trade and that the Mexican orange market is now opened to trade. Identify the new equilibrium price, quantity consumed, quantity produced domestically, and quantity imported. Also show the change in the surplus of domestic consumers and producers. Has total surplus increased or decreased?
Explanation
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(a) Diagram of Mexican Orange market wit...
ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw
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