Figure 9-14.On the diagram below,Q represents the quantity of crude oil and P represents the price of crude oil.
-Refer to Figure 9-14.When the country for which the figure is drawn allows international trade in crude oil,
A)consumer surplus changes from the area A + B + D to the area A.
B)producer surplus changes from the area C to the area B + C + D.
C)total surplus decreases by the area D.
D)All of the above are correct.

Question

Figure 9-14.On the diagram below,Q represents the quantity of crude oil and P represents the price of crude oil. 
-Refer to Figure 9-14.When the country for which the figure is drawn allows international trade in crude oil,
A)consumer surplus changes from the area A + B + D to the area A. 
B)producer surplus changes from the area C to the area B + C + D. 
C)total surplus decreases by the area D. 
D)All of the above are correct.

Quizplus · Accepted Answer

When the country allows international trade, the producer surplus increases from area C to area B + C + D due to the higher world price, which benefits producers.