In a market that moves from a situation of no trade to a situation where a good is exported, in the exporting country the price of the good ________, and producer surplus ________.

Question

Quizplus · Accepted Answer

When a good is exported in the exporting country, the domestic supply of the good decreases while the domestic demand remains unchanged. This leads to an increase in the price of the good. As the price of the good increases, producer surplus also increases as producers receive a higher price for their product.

In a Market That Moves from a Situation of No