(Solved): Consider the New Zealand market for lemons. The following graph shows the domestic demand and dome ...

Consider the New Zealand market for lemons. The following graph shows the domestic demand and domestic supply curves for lemons in New Zealand. Suppose New Zealand's government currently does not allow international trade in lemons. Use the black point (plus symbol) to indicate the equilibrium price of a tonne of lemons and the equilibrium quantity of lemons in New Zealand in the absence of international trade. Then, use the green point (triangle symbol) to shade the area representing consumer surplus in equilibrium. Finally, use the purple point (diamond symbol) to shade the area representing producer surplus in equilibrium. Based on the previous graph, total surplus in the absence of international trade is The following graph shows the same domestic demand and supply curves for lemons in New Zealand. Suppose that the New Zealand government changes its international trade policy to allow free trade in lemons. The horizontal black line \( (P W) \) represents the world price of lemons at \( \$ 800 \) per tonne. Assume that New Zealand's entry into the world market for lemons has no effect on the world price and there are no transportation or transaction costs associated with international trade in lemons. Also assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. Use the green point (triangle symbol) to shade consumer surplus, and then use the purple point (diamond symbol) to shade producer surplus. Use the green point (triangle symbol) to shade consumer surplus, and then use the purple point (diamond symbol) to shade producer surplus. (?) Consumer Surplus Producer Surplus When New Zealand allows free trade of lemons, the price of a tonne of lemons in New Zealand will be \( \$ 800 \). At this price, tonnes of lemons will be demanded in New Zealand, and tonnes will be supplied by domestic suppliers. Therefore, New Zealand will export tonnes of lemons. Using the information from the previous tasks, complete the following table to analyze the welfare effect of allowing free trade. When New Zealand allows free trade, the country's consumer surplus - by , and producer surol