I am on the chapter for International Trade in the book. I neew to calculate the producer surplus after a trade and I am not sure if I am doing it right.

Graph:

Price of
Pencil Sharpeners
$16__________________________World Price
>>>>>>>|>>>>>>>>>>>>>>>>>>>>>|
>>>>>>>|>>>>>>>>>>>>>>>>>>>>>|
$12----|-----|>>>>>>>>>>>>>>>|
>>>>>>>|>>>>>|>>>>>>>>>>>>>>>|
>>>>>>>|>>>>>|>>>>>>>>>>>>>>>|
>>>>>>>|>>>>>|>>>>>>>>>>>>>>>|
$4>>>>>|>>>>>|>>>>>>>>>>>>>>>|
$0____200___300_____________450 Quantity

World Price after the trade $16 and quantity supplied is 450

Quantity demanded at world price after the trade is 200

Equalibrium before the trade was $12 and quantity supplied 300

I did what I could to draw the graph. I hope it is understandable at your end.

Question:

According to the graph, producer suplus in China after trade is:

A.$800
B.$1,200
C$1.800
D$2,700

I calculated $16 world price less $4 equals $12. $12 times 450 quantity supplied equals $5,400. $5,400 times
.5 euqals $2,700.

If my calculation is correct then D would be the answer?

Hummm. As you can see, graphing in Jiskha doesnt really work. That said, producer surplus is represented by the area below price and above supply. If this is some triangle, use the geometry formula for calculating the area of a triangle.

To calculate the producer surplus after a trade, you need to follow these steps:

1. Determine the equilibrium price and quantity before the trade. In this case, the equilibrium price before the trade is $12, and the quantity supplied is 300.

2. Determine the world price after the trade. According to the graph, the world price is $16.

3. Find the quantity supplied at the world price. From the graph, the quantity supplied at the world price is 450.

4. Find the producer surplus. Producer surplus is the area between the supply curve and the world price line, for the quantity supplied at the world price. This area represents the additional revenue producers receive compared to their cost of production.

To calculate the producer surplus, subtract the total production cost from the total revenue. In this case, the total revenue is the world price ($16) multiplied by the quantity supplied at the world price (450), which equals $7,200.

Now, let's calculate the production cost. The production cost is the equilibrium price ($12) multiplied by the quantity supplied at the equilibrium price (300), which equals $3,600.

Subtracting the production cost from the total revenue, we get $7,200 - $3,600 = $3,600.

Therefore, the correct answer to the question would be:

A. $3,600

It seems like you made a calculation error when multiplying $12 by 450. Please double-check your calculations and try again.