The figure above shows the U.S. market for T-shirts, where S(us) is the domestic supply curve and D(us) is the domestic demand curve. The United States trades freely with the rest of the world. The world price of a T-shirt is $5.

Based on the figure above, as a result of international trade, producer surplus

a) decreases by $150 million

b) increases by $90 million

c) increases by $150 million

d) decreases by $90 million

e) remains unchanged
 

Transcribed Image Text:

Price (dollars per T-shirt) 15 10 8 5 0 Sus 20 World price Dus 40 60 Quantity (millions of T-shirts per year) Price (dollars per T-shirt) 15 10 8 5 0 Sus 20 World price Dus 40 60 Quantity (millions of T-shirts per year)

Answer rating: 100% (QA)

chnage in producer surplus producer surplus before trade producer surplus after tra... View the full answer