Exhibit 34-2

-Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is PW.If there is a policy change such that imports are prohibited,the price becomes PN,U.S.consumers are worse off if imports are __________; specifically,their consumers' surplus changes by area __________.

Question

Exhibit 34-2
 
-Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is PW.If there is a policy change such that imports are prohibited,the price becomes PN,U.S.consumers are worse off if imports are __________; specifically,their consumers' surplus changes by area __________.

Quizplus · Accepted Answer

U.S. consumers are worse off if imports are prohibited because they have to pay a higher price for the good. The change in consumer surplus is equal to the area P_NBCP_W.

Exhibit 34-2 -Refer to Exhibit 34-2.The U.S.demand and Supply for a Good