Wednesday
December 7, 2016

Homework Help: Economics

Posted by G on Saturday, May 10, 2008 at 10:16am.

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?

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