Refer to the figure below to answer the following question. Figure 7.2.3
-Refer to Figure 7.2.3.The graph shows the market for shoes in Canada.The world price of a pair of shoes is $20.Moving from a situation of no international trade to a situation of free international trade,Canadian consumer surplus ________ and Canadian producer surplus ________.
A)increases by area A + B;decreases by area B
B)increases by area B;decreases by area B
C)increases by area A;decreases by area B
D)decreases by area A + B;increases by area B
E)decreases by area B;increases by area A

Question

Refer to the figure below to answer the following question.  Figure 7.2.3
-Refer to Figure 7.2.3.The graph shows the market for shoes in Canada.The world price of a pair of shoes is $20.Moving from a situation of no international trade to a situation of free international trade,Canadian consumer surplus ________ and Canadian producer surplus ________.
A)increases by area A + B;decreases by area B 
B)increases by area B;decreases by area B 
C)increases by area A;decreases by area B 
D)decreases by area A + B;increases by area B 
E)decreases by area B;increases by area A

Quizplus · Accepted Answer

When moving to free international trade from no international trade, Canadian consumer surplus increases by areas A + B due to access to cheaper world prices, while Canadian producer surplus decreases by area B because local producers face competition from cheaper imports.

Refer to the Figure Below to Answer the Following Question