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A-Level Economics · Free trade at the world price (imports) diagram question

Which area is the GAIN in consumer surplus from opening to trade?

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The diagram

The answer

The area G E B F. CS goes from CGE to CFB; the slice added is GEBF — the price fall on the units they already bought, plus the surplus on the new units Q₁ to Q₃. Do it as before-and-after. CS before trade is the triangle CGE; CS after trade is the bigger triangle CFB. Subtract and what is left is GEBF: a rectangle from paying PW instead of P₁ on existing units, plus a triangle of surplus on the extra units the imports make possible.

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This is one of 6 questions on the free trade at the world price (imports) diagram — every corner lettered, every wrong answer diagnosed.

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