In a market that moves from a situation of no trade to a situation where a good is imported,the price of the good ________,the quantity produced by the domestic industry ________,and producer surplus ________.

Question

Quizplus · Accepted Answer

When a good is imported, the domestic industry faces competition from foreign producers which leads to a decrease in the price of the good. This fall in price reduces the producer surplus of the domestic industry. As the domestic industry finds it difficult to compete with the foreign producers, the quantity produced by the domestic industry also decreases.

In a Market That Moves from a Situation of No