Exporting Country

Exports

• In the diagram above, at the world price of $12, the domestic supply is

  50

  ---

  units and the domestic demand is only

  30

  ---

  units so this country can export the difference between supply and demand to other countries.
• The exports are equal to the excess

  supply

  ---

  .
• In the diagram above the exports =

  50 - 30 = 20

  ---

• WIthout trade, the price is

  $10

  ---

  so the consumer surplus is the triangle above that (A + B)
• With trade, the price is

  $12

  ---

  and domestic consumers are buying a quantity of

  30

  ---

  so consumer surplus is the triangle above that price and quantity (A).

• Without trade, the price is

  $10

  ---

  so the producer surplus is the triangle below that (C).
• With trade, the price is

  $12

  ---

  and domestic producers are selling a total quantity of

  50

  ---

  so producer surplus is the triangle below that price and quantity (B + C + D). We can summarize all this below: