Consider the Honduran market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Honduras. Suppose Honduras's government currently does not allow...

Extracted text: Consider the Honduran market for soybeans. The following graph shows the domestic demand and domestic supply curves for soybeans in Honduras. Suppose Honduras's government currently does not allow international trade in soybeans. Use the black point (plus symbol) to indicate the equilibrium price of a ton of soybeans and the equilibrium quantity or soybeans in Honduras in the absence of international trade. Then, use the green triangie (triangie symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purpie triangle (diamond symbol) to shade the area representing producer surpius in equilibrum. Domestic Supply 380 Domestic Demand 365 Equilibrium without Trade 350 335 320 Consumer Surplus 305 290 Producer Surplus 275 260 245 230 25 50 75 100 125 150 175 200 225 250 QUANTITY (Tans of saybeans) Based on the previous graph, total surplus in the absence of international trade is s PRICE (Dollars per ton)


Extracted text: The following graph shows the same domestic demand and supply curves for soybeans in Honduras. Suppose that the Honduran government changes Its international trade policy to allow free trade in soybeans. The horizontal black line (Pw) represents the world price of soybeans at $350 per ton. Assume that Honduras's entry into the world market for soybeans has no effect on the world price and there are no transportation or transaction costs associated with intemational trade in soybeans. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the green triangle (triangle symbol) to shade consumer surplus, and then use the purple triangle (dlamond symbol) to shade producer surplus. 380 Domestic Demand Domestic Supply 365 Consumer Surplus 350 335 320 Producer Surplus 305 290 275 260 245 230 25 50 75 100 125 150 175 200 225 200 QUANTITY (Tons of saybeans) When Honduras allows free trade of soybeans, the price of a ton of soybeans in Honduras will be $350. At this price, tons of soybeans will be demanded in Honduras, and |tons will be supplied by domestic suppliers. Therefore, Honduras will export |tons of soybeans. Using the information from the previous tasks, compiete the following table to analyze the weifare effect of allowing free trade. Without Free Trade With Free Trade (Dollars) (Dollars) Consumer Surplus Producer Surplus When Honduras allows free trade, the country's consumer surplus , and producer surplus by $ So, the net effect of intenational trade on Honduras's total surplus is a of PRICE (Dollars per ton)