A country moves from a situation of no trade to a situation where a good is imported.In the importing country the price of the good ________,and producer surplus ________.

Question

Quizplus · Accepted Answer

When a country starts importing a good, the domestic price of that good typically falls due to the availability of cheaper imported alternatives. This decrease in price reduces the producer surplus because producers are now receiving less for their goods than they were when the domestic market was closed to international trade.

A Country Moves from a Situation of No Trade to a Situation