Part a: In economics sense autarky is defined as being self-sufficient, when a nation can provide all of the goods and services it needs internally. While free trade is a condition where a nation removes barriers to allow for international trade ( Ethier 2008). In Australia the banana industry is heavily protected by a "zero import" ban on imports of banana, creating a condition that benefits the producers more than the consumers. Producer surplus is defined as the minimum amount that they are willing to accept for a good, the difference between the actual and minimum they receive is the benefit the producer receives. On the other hand consumer surplus is the minimum amount they are willing to pay for a good or service relative to the market price, the difference between the what the consumer is willing to pay and the market price is how it occurs (Hubbard et al. 2010, 131-133).
The figure below (Fig 1) illustrates the Australian banana market in autarky and free trade positions and show how an increase in consumer surplus occurs under free trade position and how producer surplus decreases.
Price of bananas ($/kg)

Domestic Supply, DS

e a b

World Price
QS

QA

QD

d
A

P 1 f P 2
D
B

Imports

Domestic Demand, DD
0

Quantity of bananas (kg)

Fig 1: Supply-demand diagram in autarky and free-trade positions

Exposing the Australian banana industry to free trade economy will mean a lift on the ban for banana imports. Under autarky the economy is at equilibrium point A with price P1 and quantity Qs. At point A, consumer surplus is equivalent to a+d=$585m while producer surplus is b+e+f=$135.
Under free trade price of bananas moves from P1 to P2 and the quantity supplied by the banana producers reduces from QA to QS. The reduction in prices is caused by the world price effect but this reduction in price has negative and