Refer to the figure below to answer the following questions.

Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, international trade ________ total surplus in Canada by ________.
A)decreases; $2.56 billion
B)increases; $4.8 billion
C)decreases; $3.6 billion
D)decreases; $1.92 billion
E)increases; $1.92 billion

Question

Refer to the figure below to answer the following questions.
  
Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, international trade ________ total surplus in Canada by ________.
A)decreases; $2.56 billion 
B)increases; $4.8 billion 
C)decreases; $3.6 billion 
D)decreases; $1.92 billion 
E)increases; $1.92 billion

Quizplus · Accepted Answer

International trade increases total surplus in Canada by the area A+B+C, which is $1.92 billion. Area A represents the increase in consumer surplus, area B represents the increase in producer surplus, and area C represents the gains from trade (the difference between world price and domestic cost of production). Therefore, the correct answer is (E) increases; $1.92 billion.

Refer to the Figure Below to Answer the Following Questions