Exhibit 3

-Refer to Exhibit 3. If free trade is allowed, consumer surplus is the

Question

Exhibit 3
 
-Refer to Exhibit 3. If free trade is allowed, consumer surplus is the

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum amount consumers are willing to pay and the actual price they pay. When free trade is allowed, the price of the good will decrease from P_world to P_domestic, leading to an increase in consumer surplus. The areas that contribute to consumer surplus are A + B + C + D + E + F. Therefore, the best choice is C.

Exhibit 3 -Refer to Exhibit 3. If Free Trade Is Allowed, Consumer