When a country allows trade and imports a good,
A) domestic producers are worse off, domestic consumers are better off, and the nation is worse off because the losses of the losers exceed the gains of the winners.
B) domestic consumers are worse off, domestic producers are better off, and the nation is worse off because the losses of the losers exceed the gains of the winners.
C) domestic producers are worse off, domestic consumers are better off, and the nation is better off because the gains of the winners exceed the losses of the losers.
D) domestic consumers are worse off, domestic producers are better off, and the nation is better off because the gains of the winners exceed the losses of the losers.

Question

Quizplus · Accepted Answer

When a country allows trade and imports a good, domestic producers are likely to be worse off because the increased competition from foreign producers will lead to a decrease in demand for their products, potentially causing them to go out of business. However, domestic consumers will benefit from the increased availability of cheaper products. Overall, the nation is likely to be better off because the gains from the increased consumption and lower prices will exceed the losses of the producers who are negatively affected by the competition.

When a Country Allows Trade and Imports a Good