Suppose the domestic supply (Q^S) and demand (Q^D) for skateboards in the United States are given by the following set of equations: $$\begin{array} { l } Q ^ { S } = - 60 + 3 P \ Q ^ { D } = 390 - 2 P \end{array}$$ Calculate the change in consumer surplus when the United States engages in free trade and imports skateboards from the rest of the world at a per unit price of $75. A)+$2,850 B)-$2,850 C)-$6,300 D)+$3,375

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To calculate the change in consumer surplus due to free trade, we first find the equilibrium price and quantity without trade. Setting $Q^S = Q^D$, we get:$$-60 + 3P = 390 - 2P$$Solving for $P$, we get:$$5P = 450$$$$P = 90$$At $P = 90$, the quantity demanded and supplied is:$$Q = -60 + 3(90) = 210$$With free trade at a price of $75, the quantity demanded increases since the price is lower than the domestic equilibrium price. The new quantity demanded at $75 is:$$Q^D = 390 - 2(75) = 390 - 150 = 240$$The change in consumer surplus is the area of the triangle formed between the original price ($90), the new price ($75), and the increase in quantity demanded (from 210 to 240 units). The height of the triangle is the price difference ($90 - $75 = $15), and the base is the change in quantity (240 - 210 = 30 units). The area of this triangle, representing the change in consumer surplus, is:$$\frac{1}{2} \times 15 \times 30 = \frac{450}{2} = 225$$The total increase in consumer surplus also includes the rectangle formed by the original quantity demanded (210 units) at the price difference ($15), which is:$$210 \times 15 = 3150$$Adding the two areas together gives the total change in consumer surplus:$$225 + 3150 = 3375$$Therefore, the change in consumer surplus is +$3,375.

Suppose the Domestic Supply (QS) and Demand (QD) for Skateboards QS=−60+3PQD=390−2P\begin{array} { l } Q ^ { S } = - 60 + 3 P \\Q ^ { D } = 390 - 2 P\end{array}QS=−60+3PQD=390−2P​

Suppose the Domestic Supply (Q^S) and Demand (Q^D) for Skateboards $\begin{array} { l } Q ^ { S } = - 60 + 3 P \\Q ^ { D } = 390 - 2 P\end{array}$