During the first 6 months of 2008, the United States imported from Africa, Asia, and Latin America more than 1.6 billion pounds of coffee and did not export any coffee. How is the gain from imports distributed between consumers and domestic producers?

Question

Quizplus · Accepted Answer

Since the United States did not export any coffee, domestic producers would not have benefitted from the imports. Therefore, U.S. producers are harmed. On the other hand, since coffee was imported, consumers would have had access to a greater supply of coffee, which would decrease the price of coffee, benefiting U.S. consumers. Therefore, U.S. consumers are helped. Thus, the gain from imports is distributed between U.S. consumers and domestic producers, but more of the gain goes to consumers as they are helped while producers are harmed. Hence, option D is the correct answer.

During the First 6 Months of 2008, the United States