is no trade, the equilibrium is at point E.

Step 1. Look at Figure 20.4, which shows a hypothetical version of the demand and supply of sugar in the United

States.

Step 2. Note that when there is free trade the sugar market is in equilibrium at point A where Domestic Quantity
Demanded (Qd) = Quantity Supplied (Domestic Qs + Imports from Brazil) at a price of PTrade.

Step 3. Note, also, that imports are equal to the distance between points C and A.

Step 4. Recall that consumer surplus is the value that consumers get beyond what they paid for when they buy a

product. Graphically, it is the area under a demand curve but above the price. In this case, the consumer surplus
in the United States is the area of the triangle formed by the points PTrade, A, and B.
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