Figure 9-17
-Refer to Figure 9-17.With free trade,consumer surplus is

Question

Figure 9-17 
-Refer to Figure 9-17.With free trade,consumer surplus is

Quizplus · Accepted Answer

Free trade results in an increase in overall welfare, represented by the sum of consumer surplus and producer surplus. In this case, after free trade, the new equilibrium price is $8 and the quantity traded is 60. Consumer surplus is the area above the price and below the demand curve, which is (1/2)(10-8)(100-60) = $100. Producer surplus is the area below the price and above the supply curve, which is (1/2)(8-4)(60) = $120. Adding consumer and producer surplus together, we get $100 + $120 = $220, which is the overall welfare. However, the question only asks for consumer surplus. Therefore, the correct answer is C, which is the value of consumer surplus after free trade.

Figure 9-17 -Refer to Figure 9-17.With Free Trade,consumer Surplus Is