AP Microeconomics 2.9: International Trade

Use world prices to analyze imports and exports, then evaluate how tariffs and quotas change domestic prices, quantities, surplus, and revenue.

[Maximum number: 3]

The graph provided shows the market for rice in the country of Rushland.

(a)

Suppose that instead of the price floor, Rushland engages in international trade and the

world price of rice is $5 per bushel.

[ 3 ]

(i)

Will Rushland export or import rice? Explain using numbers from the graph.

[ 1 ]

(ii)

Calculate the domestic consumer surplus when Rushland engages in international trade.

Show your work.

[ 1 ]

C(ii) / Point 4	Calculate domestic consumer surplus as $125: 1/2 × ($ 10 − $5) × 50 =$ 125.	1 point

(iii)

Calculate the total revenue that Rushland's farmers will earn at the world price. Show

your work.

[ 1 ]

C(iii) / Point 5	Calculate total revenue as $400: world price × quantity sold =$ 5 × 80 = $400.	1 point

All question bank results loaded

POL-1.B—a. Define tariffs and quotas. b. Explain (using graphs where appropriate) how markets are affected by public policy related to… question 1