Scenario 9-2
• For a small country called Boxland,the equation of the domestic demand curve for
cardboard is ,
where represents the domestic quantity of cardboard demanded,in tons,and represents the price of a ton of cardboard.
• For Boxland,the equation of the domestic supply curve for cardboard is ,
where represents the domestic quantity of cardboard supplied,in tons,and again
represents the price of a ton of cardboard.
-Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard
A)benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660.
B)harms Boxlandian consumers by $736 and harms Boxlandian producers by $598.
C)harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864.
D)harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984.

Question

Scenario 9-2
• For a small country called Boxland,the equation of the domestic demand curve for
cardboard is  ,
where  represents the domestic quantity of cardboard demanded,in tons,and  represents the price of a ton of cardboard.
• For Boxland,the equation of the domestic supply curve for cardboard is  ,
where  represents the domestic quantity of cardboard supplied,in tons,and  again
represents the price of a ton of cardboard.
-Refer to Scenario 9-2.Suppose the world price of cardboard is $60.Then,relative to the no-trade situation,international trade in cardboard
A)benefits Boxlandian consumers by $750 and harms Boxlandian producers by $660. 
B)harms Boxlandian consumers by $736 and harms Boxlandian producers by $598. 
C)harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864. 
D)harms Boxlandian consumers by $804 and benefits Boxlandian producers by $984.

Quizplus · Accepted Answer

When the world price of cardboard is $60, Boxlandian producers will be willing to supply 1,100 tons of cardboard (found by setting the domestic supply equal to the price: 1100 = 30 + 20P). Similarly, Boxlandian consumers will be willing to demand 600 tons of cardboard (found by setting the domestic demand equal to the price: 600 = 90 - 10P).

If Boxland opens up to international trade, they will export cardboard since the world price of $60 is higher than their domestic price of $30. The quantity of exports will be the difference between the quantity supplied domestically and the quantity demanded domestically: 1,100 - 600 = 500 tons.

At a price of $60 and with international trade, Boxlandian consumers will be able to purchase 500 tons of cardboard at the world price of $60, and 100 tons domestically at a price of $30. This gives them a total cost of 500($60) + 100($30) = $33,000.

Boxlandian producers will supply 100 tons domestically (at a price of $30) and lose 500 tons to exports (at a price of $60). This gives them a total revenue of 100($30) + 500($60) = $33,000, which is a $864 gain relative to the situation without trade.

Therefore, international trade in cardboard harms Boxlandian consumers by $704 and benefits Boxlandian producers by $864.

Scenario 9-2 • for a Small Country Called Boxland,the Equation of the of the Domestic