A country opens up to trade and becomes an exporter of a good.Consumer surplus ________ and producer surplus ________.

Question

Quizplus · Accepted Answer

When a country opens up to trade and becomes an exporter of a good, consumer surplus typically decreases because domestic prices tend to rise to meet the world price, making goods more expensive for local consumers. Producer surplus increases because producers can now sell their goods at a higher price on the world market, leading to higher profits.

A Country Opens Up to Trade and Becomes an Exporter