In a Market That Moves from a Situation of No

question 76

Multiple Choice

In a market that moves from a situation of no trade to a situation where a good is exported, in the exporting country the price of the good ________, and producer surplus ________.

• A)rises; increases
• B)falls; decreases
• C)does not change; increases
• D)does not change; decreases
• E)rises; decreases

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Definitions:

Tariff

A tax imposed by a government on imports or exports of goods to regulate trade policies.

Excise Tax

A sales tax levied on a particular good or service; for example, gasoline and cigarette taxes.

Imported Good

A product or service brought into one country from another for use, sale, or consumption.

Comparative Advantage

Economic theory suggesting that a party should specialize in producing and trading goods that it can produce at a lower opportunity cost than others, leading to increased efficiency and profit.