Scenario 9-1
The before-trade domestic price of peaches in the United States is $40 per bushel.The world price of peaches is $52 per bushel.The U.S.is a price-taker in the market for peaches.
-Refer to Scenario 9-1.If trade in peaches is allowed,the price of peaches in the United States
A)will increase,and this will cause consumer surplus to decrease.
B)will decrease,and this will cause consumer surplus to increase.
C)will be unaffected,and consumer surplus will be unaffected as well.
D)could increase or decrease or be unaffected;this cannot be determined.

Question

Quizplus · Accepted Answer

When trade is allowed, the price in the U.S. will rise to the world price of $52, reducing consumer surplus as consumers pay more.

Scenario 9-1 The Before-Trade Domestic Price of Peaches in the United States