The figure above shows the U.S. market for airplanes, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of an airplane is $150 million.
-Based on the figure above,as a result of international trade,producer surplus
A) increases by $15 billion.
B) decreases by $15 billion.
C) increases by $27.5 billion.
D) decreases by $12.5 billion.
E) remains unchanged.

Question

The figure above shows the U.S. market for airplanes, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of an airplane is $150 million.
-Based on the figure above,as a result of international trade,producer surplus
A) increases by $15 billion. 
B) decreases by $15 billion. 
C) increases by $27.5 billion. 
D) decreases by $12.5 billion. 
E) remains unchanged.

Quizplus · Accepted Answer

Producer surplus increases by $27.5 billion due to international trade, as it expands the market for producers, allowing them to sell more goods at a higher price than they could domestically.

The Figure Above Shows the U