In May 2015, China and Brazil ended a Chinese trade embargo on Brazilian beef in effect since 2012. Brazil’s Agricultural Ministry said it expects to have 26 plants ready to ship meat to China by June, freeing up some $520 million in exports. (Source: WSJ, May 20, 2015)
Assume that domestic beef price in China would be higher without import. Illustrate the welfare impact of Brazilian beef import on Chinese consumers and Chinese beef processing industry using demand and supply curves.
What is Chinese consumers gain or loss? What is Chinese beef processors’ gain or loss? Change in total domestic welfare?