Assume an economy moves from autarky to free international trade.In the export sector,consumer surplus _____,producer surplus _____,and the economy as a whole _____.

Question

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In the export sector, consumer surplus falls because domestic prices typically rise to meet the world price, leading to higher costs for consumers. Producer surplus rises as producers can now sell at higher prices on the international market. The economy as a whole gains from trade due to the increase in overall efficiency and the benefits of specialization.

Assume an Economy Moves from Autarky to Free International Trade