Alright. Let's try the first situation. Here we're going to see where the world price is higher than the domestic price. Okay? So let's see what happens when we have a high world price. Here we've got the same kind of graph we had above, except now this red line is going to indicate the world price, right? So if we look here, this was our original quantity, right, and our original price when we were in autarky, right, when there was no trade allowed internationally. So here we still have our domestic supply and our domestic demand, right. So we're going to be focusing on this domestic market in this situation where they're trading internationally, right? So if we had this price and quantity and now we opened up to international trade and we found out that in this market, the world price was something higher than our equilibrium price in the country, right? So remember now that we have this high world price and we are trading internationally, this world price is the price that's going to prevail on the market. Okay, so let's go ahead and see what happens at this price, right? We've seen what happens with high prices before, right? So it's kind of going to follow in that same suit here, so let's see what happens. This first spot right here where the world price touches the demand curve, right, that's going to be the quantity demanded, once we open up to international trade and remember that's the domestic quantity demanded, so the people the consumers in our country demand this much quantity at the higher price, right? And we would expect that. We would expect the quantity demanded to go down because the price went up, right? So what do you think happened to quantity supplied? If the price goes up, we would expect quantity supplied to increase too, right? Because supply increases with price. So let's go ahead and see that, and that's going to be this dot right here right where the world price touches the supply curve. We're going to get the quantity supplied in this example. So we've seen this before right where the price was higher than equilibrium and in this case just like we see here, the quantity supplied is greater than the quantity demanded, right? So before we would see this and we would think that it was a surplus, right. We would see this surplus and we talked about it being all these inefficiencies, right. We were putting too many resources into this market, we needed to be at equilibrium, but now let's see what happens when we have international trade. This surplus can be sold in other countries, right? We have these extra units, now the people in our country don't want to buy them, but there are people in other countries that are willing to pay this world price, for this surplus, right? For these extra units extra units that we're not gonna be able to sell here. So what ends up happening is that that same surplus, that distance between here and here, that ends up being exported. These become exports, right? So exports, we've got our definition here on the right. First here, domestic quantity surplus, so whenever we have this surplus right in the domestic market, we can turn those into exports if we're trading internationally. Right? So these exports, they're goods that are produced domestically here at home but sold overseas, right? Sold in another market, in some other market. Cool? So that's kind of what we're going to be dealing with here and now what we want to do is be able to analyze what's happened to our surplus, our consumer surplus and our producer surplus in this situation, right? What has this done to our surpluses? So I'm going to label the graph, in all these different little sections. So I'll call this section up here A, this section right here B, C, and then we'll have, D right here, E and F. Cool? Alright. So let's go ahead and say which section goes where. So before we started trading internationally, we were in that situation of autarky, right, and we could see that our consumer surplus before, right? It was at our equilibrium price, so our original surplus was this triangle, right? And I'm going to ask you not to shade stuff in yet because I'd rather you shade it in, once we get to the once we do start trading, right? I'm just showing you the before situation and then I'm going to erase this. This. So that was the consumer surplus that we were used to, right. Everything above the equilibrium price and under the demand curve, right? So that was just section A plus B plus C. That was our consumer surplus and we saw that our producer surplus was everything below the price but above the supply curve, right? So it was that triangle kind of like we're used to. That standard case here and that's just E plus F, right? So in this situation our total surplus was that A plus B+C+F. Right? So all those sections are part of our surplus. I'm going to go ahead and erase this now and then we're going to reshade for our after trading, right? So now we've opened up trade, the world price is higher, right? So we've got this situation where we're going to be exporting goods. So what's going to happen here to our consumer /_surplus? So remember Consumer Surplus is everything above price and below the demand curve. In this case, the price is the world price_right? So what's gonna be that section? It's gonna be everything above the world price and below the demand curve right? So it's gonna be this little triangle right here. It's just A now and that makes sense right because the price went up, we would expect consumer surplus to decrease and that's exactly what's happened here. We see that consumer surplus_is just A now. So here what's happened is we've lost B plus C from consumer surplus,right? They've lost those sections of the surplus, but let's see what's happened to producer_surplus. Now producer surplus is gonna be everything below the price, but above the supply curve, right? So in this case, we've got below the price is gonna be all of this, but look how much it extends now. It's gonna go all_the_way out here, right? Because that's all_below the_price and we did produce all those_units, right? We've produced all the units all the way including that area of D. So we see that the producer surplus_has increased_here right? So producer surplus on_top of being E plus F is now B plus C plus D plus E plus F, right? So producer surplus has increased significantly_here_right? They took some of that surplus from the consumers from the higher price, but they also added a little extra_surplus there in section D. So_you'll see_that producer surplus has gone up B plus C plus D right? So they_got_even a little more than what the consumers lost here, right? So here's our grand finale of our exporting situation is that now our surplus includes D, right? Our total surplus_has increased for this economy. So plus D, right? So something_that was not surplus before we started trading, we now_have that_as surplus and remember when we were_talking about trading in the comparative advantage in the right, we saw that we were able to reach points outside of our because of these gain_from trade and this is exactly what we're seeing here in the international trading_example_is_that our surplus_has increased past the point we could have done it just with our domestic demand and_supply. Cool? So our surplus is_even higher_here in the situation of international trade. Let_me get out of the way so we can fill in these little_conclusions_here at the bottom. So we've got this that in exporting, exporting is gonna_make a_country_producers better off, right? And that's what we see here that the producer surplus has increased significantly and the consumer_surplus has decreased, right? The consumers are worse off, right? So there's always gonna be winners and losers here, but what we see in this situation is_THAT the_gains to the_producers are bigger_than the_losses to the_consumers, right? So in total our nation is gonna be better off as a whole, right? So that's_about it for exports. Why don't we go_on to the_next video, we're gonna_talk about imports And you're gonna see that we're_gonna reach a_lot of the_same conclusions, but it's kinda_goto be backwards. So let's go_ahead_and_do_that in the next_video.