Figure 9-2. The domestic country is China.

-Refer to Figure 9-2.The increase in total surplus in China when trade becomes allowed is

Question

Figure 9-2. The domestic country is China.
 
-Refer to Figure 9-2.The increase in total surplus in China when trade becomes allowed is

Quizplus · Accepted Answer

The increase in total surplus in China when trade becomes allowed is equal to the sum of the consumer surplus, producer surplus, and government revenue gain. In the graph, the consumer surplus increases from area A+B to A+C+D+E, which is $400. The producer surplus increases from area F+G+H to F+H, which is $100. The government revenue gain is the rectangle C+G and is $0. Therefore, the total surplus increase is $400+$100=$500, which is option B.

Figure 9-2. the Domestic Country Is China