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, consumer surplus increases because consumers can buy sugar at a lower world price. Producer surplus decreases because domestic producers receive a lower price for their sugar. Total surplus increases as the gains from trade (consumer gains outweighing producer losses) lead to a net welfare gain.

A Country Opens Up to Trade and Becomes an Importer