The figures below show markets for solar panels and textiles in Banana Republic. Pwₒᵣld is the world price in each market.

-Refer to the figures above.When Banana Republic opens up to international trade,the total surplus ________.

Question

The figures below show markets for solar panels and textiles in Banana Republic. Pwₒᵣld is the world price in each market.
 
-Refer to the figures above.When Banana Republic opens up to international trade,the total surplus ________.

Quizplus · Accepted Answer

With international trade, Banana Republic can access the world market price and produce at a lower cost than the autarky cost, resulting in an increase in producer surplus and consumer surplus in both markets. Therefore, the total surplus increases in both markets.

The Figures Below Show Markets for Solar Panels and Textiles