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Figure: The Domestic Supply and Demand for SUVs in the United States
-(Figure: The Domestic Supply and Demand for SUVs in the United States) Look at the figure The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. In the United States, consumer surplus would _____ and producer surplus would _____.

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Figure: The Domestic Supply and Demand for SUVs in the United States 
-(Figure: The Domestic Supply and Demand for SUVs in the United States) Look at the figure The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. In the United States, consumer surplus would _____ and producer surplus would _____.

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With free trade, the domestic price will equal the world price of $50,000, which is below the original equilibrium price of $60,000. As a result, domestic producers will experience a decrease in their producer surplus, since they are now receiving a lower price for their SUVs. However, domestic consumers will benefit from the lower price, which will increase their consumer surplus. Therefore, consumer surplus will increase but producer surplus will decrease.

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