Question

Moldavia is a small country that currently trades freely in the world barley market. Demand and supply for barley in Moldavia is governed by the following schedules: Demand: QD = 4 - P Supply: QS = P P -- $ / bushel of barley Q -- bushels of barley The world price of barley is $1 / bushel. Calculate the free trade equilibrium price and quantity of barley in Moldavia. How many bushels do they import or export? On a well-labeled graph, depict this equilibrium situation and shade the gains from trade relative to the autarkic (no-trade) equilibrium in Moldavia. b. .   PS#4 - Part II-A - 19.2 At this free trade equilibrium, Moldavia ______________. A.  Exports 1 bushel of barley. B.  Imports 1 bushel of barley. C.  Exports 2 bushels of barley. D.  Imports 2 bushels of barley Submit Answer

Answer 1

the orange area is consumer surplus

The green area is producer surplus

And the pink one is gain from trade relative to autarkic equilibrium

It is a gain for consumer surplus if we add the orange area and the pink area it'll be the new consumer surplus or Increased consumer surplus.

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