Exhibit 33-2

-Refer to Exhibit 33-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is P_W. If there is a policy change such that imports are prohibited, the price becomes P_N, U.S. consumers are worse off if imports are __________; specifically, their consumers' surplus changes by area __________.

Question

Exhibit 33-2

-Refer to Exhibit 33-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is P_W. If there is a policy change such that imports are prohibited, the price becomes P_N, U.S. consumers are worse off if imports are __________; specifically, their consumers' surplus changes by area __________.

Quizplus · Accepted Answer

U.S. consumers are worse off if imports are prohibited because the price of the good increases from P_W to P_N, and the quantity demanded decreases from Q_W to Q_N. This results in a loss of consumer surplus equal to area P_NBCP_W.

Exhibit 33-2 ​

Exhibit 33-2