When looking at the impact of a change in trade policy economists use consumer and producer surplus to look at the winners and losers. Free trade economists insist that
A)no one loses.
B)everyone loses.
C)there are winners and losers but that the gain to the winners is greater than the loss to the losers.
D)there are winners and losers but that the loss to the losers is greater than the gain to the winners.

Question

Quizplus · Accepted Answer

Free trade economists argue that there are winners and losers when trade policy changes, but the overall gain to the winners is greater than the loss to the losers. This is because free trade allows for specialization and comparative advantage, which lead to increased efficiency and lower prices for consumers. While some domestic producers may be negatively affected by competition from foreign producers, consumers benefit from lower prices and increased variety of goods. Thus the overall welfare of the society increases.

When Looking at the Impact of a Change in Trade