When the world price of a good is higher than the domestic price, it creates a scenario where international trade can significantly impact the domestic market. In this situation, the world price becomes the prevailing price in the market, leading to changes in both quantity demanded and quantity supplied. As the price increases, the quantity demanded by consumers decreases, while the quantity supplied by producers increases. This results in a surplus, where the quantity supplied exceeds the quantity demanded.

This surplus can be exported to other countries, where consumers are willing to pay the higher world price. Exports are defined as goods produced domestically and sold in international markets. The surplus generated in the domestic market can thus be transformed into exports, allowing producers to benefit from higher prices abroad.

To analyze the effects of this trade on consumer and producer surplus, we can break down the areas on a supply and demand graph. Initially, in a state of autarky (no trade), consumer surplus is represented by the area above the equilibrium price and below the demand curve, while producer surplus is the area below the price and above the supply curve. When trade opens and the world price rises, consumer surplus decreases as consumers face higher prices, reducing their purchasing power. The new consumer surplus is represented by a smaller area above the world price.

Conversely, producer surplus increases significantly. The area below the world price and above the supply curve expands, incorporating additional surplus from the higher prices and the increased quantity supplied. The total producer surplus now includes the original surplus plus the additional surplus gained from exports. This shift indicates that while consumers may be worse off due to higher prices, producers benefit from increased sales and higher revenues.

Overall, the net effect of exporting goods is an increase in total surplus for the economy. Although consumers lose some surplus, the gains for producers are greater, leading to a net positive outcome for the nation as a whole. This illustrates the principle that international trade can create winners and losers, but the overall economic benefits often outweigh the losses experienced by consumers.