The figure above shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In the figure above, international trade _______ total surplus in the United States by _______.

Question

Quizplus · Accepted Answer

International trade increases total surplus because it allows the country to import goods at a lower price than it would cost to produce them domestically, thus increasing consumer surplus and total surplus. The increase in total surplus can be calculated by adding the increase in consumer surplus and producer surplus, minus any losses, which in this case is $1.92 billion.

The Figure Above Shows the Market for Helicopters in the United