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What is the gain in total surplus after trade?

User Hbrls
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Final answer:

After the introduction of trade barriers, the gain in producer surplus is outweighed by the loss of consumer surplus, leading to a lower social surplus overall.

Step-by-step explanation:

The gain in total surplus after trade could be thought of in terms of trade balance. Generally, trade can lead to an increase in total surplus, which is the sum of consumer surplus and producer surplus. When a country engages in international trade, it allows the market to increase efficiency, typically leading to benefits for both consumers and producers. However, this question seems to imply a scenario where trade barriers have been introduced, resulting in a shift in the equilibrium.

According to the provided steps, after trade barriers are introduced, producer surplus increases by the area Ptrade, C, E, PNoTrade. Meanwhile, consumer surplus shrinks more significantly, to the area Ptrade, A, E, PNoTrade. This indicates that the overall social surplus is lower after introducing trade barriers, as the loss in consumer surplus outweighs the gain in producer surplus.

User Amati
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