The following figure shows the demand and supply for a commodity in the domestic U.S.market as well as the global market.The commodity is imported from the rest of the world to the U.S.market.
Figure 10-3
-Refer to Figure 10-3.The total consumer surplus prior to trade was _____.

Question

The following figure shows the demand and supply for a commodity in the domestic U.S.market as well as the global market.The commodity is imported from the rest of the world to the U.S.market.
Figure 10-3

-Refer to Figure 10-3.The total consumer surplus prior to trade was _____.

Quizplus · Accepted Answer

To calculate total consumer surplus prior to trade, we need to find the area below the demand curve and above the equilibrium price (PS1U1B) up to the quantity demanded domestically (14). This gives us a triangle with a base of 14 and a height of (PS1U1B - 0). Total consumer surplus prior to trade = 1/2 * base * height = 1/2 * 14 * (PS1U1B - 0) = P₄.

The Following Figure Shows the Demand and Supply for a Commodity