When the nation of Mooseland first permitted trade with other nations,domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million.We can conclude that
A)Mooseland became an exporter of sugar.
B)the overall economic well-being of participants in the sugar market in Mooseland fell because of trade.
C)consumer surplus in Mooseland increased by $7 million.
D)the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

Question

Quizplus · Accepted Answer

The decrease in producer surplus means that producers lost some profits, but the increase in total surplus means that consumers gained more than producers lost. Therefore, consumer surplus must have increased by more than $5 million (the decrease in producer surplus) in order for the total surplus to increase by $2 million.

When the Nation of Mooseland First Permitted Trade with Other