A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will _______, producer surplus will _______, and total surplus will _______.

Question

Quizplus · Accepted Answer

When a country opens up to trade and becomes an importer of a good like sugar, consumer surplus increases because consumers now have access to sugar at lower prices due to international competition. Producer surplus decreases because domestic producers face tougher competition from abroad, leading to lower prices and profits for them. Total surplus increases because the gains to consumers from lower prices and increased choices more than offset the losses to domestic producers, and the economy benefits from more efficient resource allocation.

A Country Opens Up to Trade and Becomes an Importer