Suppose Australia has a free-trade treaty with the United States.As a result, Australia increases its exports of kangaroo to the USA.Which of the following statements is NOT true?

Question

Quizplus · Accepted Answer

The statement that the losses of Australian consumers exceed the gains of Australian producers is not true in the context of free trade. Generally, when a country exports more of a good, the producers in that country benefit from access to a larger market, which can lead to higher prices received by producers due to increased demand. This can also lead to higher prices for consumers in the exporting country, but the overall economic theory of comparative advantage suggests that the gains from trade (including the gains to producers from higher prices and increased sales) typically outweigh the losses (such as higher prices paid by consumers), making the net effect of trade positive for the country.

Suppose Australia Has a Free-Trade Treaty with the United States