When a country allows trade and becomes an importer of a good, consumer surplus:

Question

Quizplus · Accepted Answer

When a country becomes an importer of a good, consumer surplus increases as they have access to a wider variety of products at a lower price. However, producer surplus decreases as domestic producers face competition from foreign producers, leading to a decrease in profits. Therefore, the correct choice is C - consumer surplus increases but producer surplus decreases.

When a Country Allows Trade and Becomes an Importer of a Good