If an Import-Competing Firm Is the Only Domestic Producer of a Good,then

question 47

Multiple Choice

If an import-competing firm is the only domestic producer of a good,then a transition from autarky to free trade will ________ domestic price,________ producer surplus,________ consumer surplus,and ________ overall domestic national welfare.

• A) decrease; decrease; increase; increase
• B) increase; increase; increase; increase
• C) decrease; decrease; decrease; decrease
• D) increase; increase; decrease; decrease
• E) increase; increase; decrease; increase

---

Definitions:

Disposable Income

The cash pile households can utilize for their spending and savings needs after income taxes are handled.

MPC

Marginal Propensity to Consume, which represents the ratio of change in consumer spending to a change in household income.

MPS

The marginal propensity to save, which is the proportion of an increase in income that is saved rather than spent on consumption.

Disposable Income

Funds at households' discretion for savings and spending pursuits after the deduction of income taxes.