When a nation imports a good,its ________ surplus decreases and its ________ surplus increases.
A) consumer; producer
B) consumer; consumer
C) producer; producer
D) producer; consumer
E) total; consumer

Question

Quizplus · Accepted Answer

When a nation imports a good, it means that consumers in that nation are purchasing goods that were produced in another nation. This means that the consumer surplus of the importing nation increases as they are able to purchase the goods at a lower price than they would have had to pay if the goods were produced domestically. On the other hand, the producer surplus of the importing nation decreases as a result of importing the good, since the domestic producers lose sales to the foreign producers. Thus, the correct answer is D - the producer surplus of the importing nation decreases and the consumer surplus of the importing nation increases.

When a Nation Imports a Good,its ________ Surplus Decreases and Its