If Country A opens up their corn market to trade with the rest of the world and the global price of corn is lower than the equilibrium price of corn in Country A,then Country A will ________ corn,which will ________ consumer surplus,________ producer surplus,and ________ total surplus.

Question

Quizplus · Accepted Answer

If the global price of corn is lower than the equilibrium price of corn in Country A, it means that other countries can produce corn more efficiently and at a lower cost than Country A. Therefore, it is more beneficial for Country A to import corn rather than producing it domestically.

Importing corn will increase consumer surplus because consumers will be able to buy corn at a lower price. Producer surplus will decrease because domestic corn producers will face competition from cheaper imported corn. Total surplus, however, will increase because the decrease in producer surplus will be offset by the increase in consumer surplus.

If Country a Opens Up Their Corn Market to Trade