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

Question

Quizplus · Accepted Answer

In free trade, the domestic price decreases due to competition from imports, reducing producer surplus but increasing consumer surplus. Overall domestic national welfare increases due to gains from trade.

If an Import- Competing Firm Is the Only Domestic Producer