For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.

Question

Quizplus · Accepted Answer

When the world price of textiles exceeds the domestic equilibrium price, it means that producers in Country A can sell their textiles at a higher price on the international market than they could domestically. This leads to an increase in producer surplus because producers are receiving a higher price for their goods, which translates to greater profits.

For Country A, the World Price of Textiles Exceeds the Domestic