The following figure shows the demand curve, D, and supply curve, S, for milk in Cadbia.
a) What is the consumer surplus, producer surplus, and total surplus if Cadbia does not engage in free trade?
b) If the world price of milk is $4 per quart, will Cadbia import or export milk?
c) What is the change in consumer surplus, producer surplus, and total surplus if Cadbia participates in free trade?

Question

The following figure shows the demand curve, D, and supply curve, S, for milk in Cadbia.
  a) What is the consumer surplus, producer surplus, and total surplus if Cadbia does not engage in free trade?
b) If the world price of milk is $4 per quart, will Cadbia import or export milk?
c) What is the change in consumer surplus, producer surplus, and total surplus if Cadbia participates in free trade?

Quizplus · Accepted Answer

The Answer of The following figure shows the demand curve, D, and supply curve, S, for milk in Cadbia.
  a) What is the consumer surplus, producer surplus, and total surplus if Cadbia does not engage in free trade?
b) If the world price of milk is $4 per quart, will Cadbia import or export milk?
c) What is the change in consumer surplus, producer surplus, and total surplus if Cadbia participates in free trade?

The Following Figure Shows the Demand Curve, D, and Supply