When a country allows international trade and becomes an importer of a good,
A)domestic producers of the good become better off.
B)domestic consumers of the good become worse off.
C)the gains of the winners exceed the losses of the losers.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When a country becomes an importer of a good, domestic consumers benefit from lower prices, while domestic producers may suffer from increased competition. However, the gains to consumers from lower prices usually exceed the losses to producers, resulting in a net gain for the country overall (i.e. gains of winners exceed the losses of losers). Therefore, option C is the correct answer. Option A is incorrect, as domestic producers may suffer from increased competition. Option B is incorrect, as domestic consumers benefit from lower prices. Option D is incorrect, as options A and B are not both correct.

When a Country Allows International Trade and Becomes an Importer