Which of the following is correct?
i.U.S.total surplus decreases when the United States exports a good.
ii.U.S.total surplus decreases when the United States imports a good.
iii.U.S.total surplus increases when the United States imports a good and when it exports a good.
A) i only
B) iii only
C) i and ii
D) ii only
E) None of the above because the U.S. total surplus does not change as a result of trade

Question

Quizplus · Accepted Answer

iii is correct because total surplus in the U.S. increases both when the country exports goods (because it is selling goods at a higher price than the cost of production) and when it imports goods (because it is buying goods at a lower price than it would cost to produce them domestically), thus benefiting from trade.

Which of the Following Is Correct