When a country moves from autarky to free international trade, consumers and producers in the import and export sectors all gain (i.e., consumer surplus increases and producer surplus increases in both sectors).

Question

Quizplus · Accepted Answer

When a country moves from autarky to free trade, consumers in the import sector gain due to lower prices and increased variety, while producers in the import sector may lose due to increased competition. Conversely, producers in the export sector gain from access to larger markets, while consumers in the export sector may face higher prices.

When a Country Moves from Autarky to Free International Trade