What Happens When a Country Allows Trade and Becomes an Exporter

question 162

Multiple Choice

What happens when a country allows trade and becomes an exporter of a good

• A)Domestic producers gain, and domestic consumers lose.
• B)Domestic producers lose, and domestic consumers gain.
• C)Domestic producers and domestic consumers both gain.
• D)Domestic producers and domestic consumers both lose.

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Definitions:

Consumer Surplus

The disparity in what consumers are willing to invest in a good or service compared to what they eventually invest.

Demand Shifts

Occur when external factors lead to a change in the amount of a product or service that consumers are willing and able to buy at a given price, resulting in the demand curve moving rightward or leftward.

New Equilibrium

The point at which market supply and demand balance each other, and, as a result, prices become stable following a disturbance.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, measured above the supply curve.