Assuming free trade allows Norway to import computers from the rest of the world at a price of $1,500, what will be the quantity of computers imported by Norway? Compared to the situation without trade, how will Norway's consumer surplus and producer surplus change? Use the data to plot a graph and determine these values.

Show Answers

1,600 units imported, consumer surplus falls, producer surplus rises1,600 units imported, consumer surplus rises, producer surplus falls1,200 units imported, consumer surplus declines, producer surplus grows1,200 units imported, consumer surplus increases, producer surplus decreases

Explanation

When Norway opens to free trade and imports computers at $1,500, it will import 1,600 units. This leads to an increase in consumer surplus because consumers can purchase computers at a lower price, while producer surplus declines due to increased competition from imports. Plotting the data confirms these changes.