Australian represents a small part of the world orange market. a) draw a diagram depiciting the equilibrium in

Question

the australian orange market without international trade.identify the equilibriun price,equilibrium quantity,consumer surplus and producer surplus.

b) suppose that the world orange price is below the australian price before trade and that the australian orange market is now opened to trade. identify the new equilibrium price,quantity consumed, quantity produced domestically,and quantity imported.

Answer 1

New equilibrium for open trade will lead to lower price for local market and higher quantity traded.