Figure 9-1
The figure illustrates the market for wool in New Zealand.
-Refer to Figure 9-1.When trade in wool is allowed,producer surplus in New Zealand

Question

Figure 9-1
The figure illustrates the market for wool in New Zealand. 
-Refer to Figure 9-1.When trade in wool is allowed,producer surplus in New Zealand

Quizplus · Accepted Answer

When trade in wool is allowed, the domestic price in New Zealand rises from Pd to Pt, and as a result, producer surplus increases by the areas B and D. Additionally, due to trade, New Zealand producers can sell more wool at a higher price, resulting in an increase in producer surplus by the area G. Therefore, producer surplus increases by the area B + D + G.

Figure 9-1 The Figure Illustrates the Market for Wool in New Zealand