We will now look at international trade. International trade means anything that happens outside of a given nation.
This is a graph of domestic supply and demand for a closed economy. Domestic means that it happens within a nation. A closed economy is one that does not trade with any other nation. In this graph, the price will be represented by Pd and the quantity will be represented will be represented by Qd.
There are two more terms we to look at. First is the consumer surplus. Consumer surplus is the difference between the total amount consumers are willing to pay and the total they actually pay. This means consumers are willing to pay more for the good or service they bought.
Next is the producer surplus. This is the difference between what producers are willing to supply and the price they actually received. When there is a producer surplus, this means producers were willing to charge less for their good or surplus.
