consumption (with the extra production exported), and the amount produced in the United States will be less

than the amount of U.S. consumption (with the extra consumption imported). Exports to the United States will

reduce the sugar supply in Brazil, raising its price. Imports into the United States will increase the sugar

supply, lowering its price. When the sugar price is the same in both countries, there is no incentive to trade

further. As Figure 20.2 shows, the equilibrium with trade occurs at a price of 16 cents per pound. At that price,

the sugar farmers of Brazil supply a quantity of 40 tons, while the consumers of Brazil buy only 25 tons.

The extra 15 tons of sugar production, shown by the horizontal gap between the demand curve and the supply

curve in Brazil, is exported to the United States. In the United States, at a price of 16 cents, the farmers produce

a quantity of 72 tons and consumers demand a quantity of 87 tons. The excess demand of 15 tons by American
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