If Freedonia Changes Its Laws to Allow International Trade in Software

question 296

Multiple Choice

If Freedonia changes its laws to allow international trade in software and the world price is lower than its domestic price,then it must be the case that

• A)both consumer surplus and producer surplus increase.
• B)consumer surplus increases and producer surplus decreases.
• C)consumer surplus decreases and producer surplus increases.
• D)both consumer surplus and producer surplus decrease.

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Definitions:

Line Comparison Experiment

An experiment, often associated with Solomon Asch's studies, that demonstrates how social pressure can influence individuals to conform, even when evidence contradicts the group's consensus.

Conformed

The process of adjusting one's behavior or thinking to match those of others, typically in a group context.

Door-In-The-Face Effect

A compliance technique that involves making a large request that is expected to be turned down in order to increase the likelihood that a smaller request will be accepted.

Requests

The act of politely or formally asking for something.