Domestic producers of a good become better off,and domestic consumers of a good become worse off,when a country begins allowing international trade in that good and

Question

Quizplus · Accepted Answer

When a country allows international trade in a good, domestic producers must now compete with foreign producers who can sell the same product at a lower price. As a result, the domestic price of the good will likely decrease to match the lower world price. This benefits consumers who can now buy the good at a lower price, but hurts domestic producers who now receive a lower price for their product. Therefore, the domestic producers become better off when the world price is below their domestic price, and worse off when the world price exceeds their domestic price.

Domestic Producers of a Good Become Better Off,and Domestic Consumers