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

consumers, shown by the horizontal gap between demand and domestic supply at the price of 16 cents, is

supplied by imported sugar. Free trade typically results in income distribution effects, but the key is to

recognize the overall gains from trade, as Figure 20.3 shows. Building on the concepts that we outlined in

Demand and Supply and Demand, Supply, and Efficiency in terms of consumer and producer surplus, Figure

20.3 (a) shows that producers in Brazil gain by selling more sugar at a higher price, while Figure 20.3 (b) shows

consumers in the United States benefit from the lower price and greater availability of sugar. Consumers in

Brazil are worse off (compare their no-trade consumer surplus with the free-trade consumer surplus) and U.S.

producers of sugar are worse off. There are gains from trade—an increase in social surplus in each country.
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