When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy,the result was that the country began to import automobiles.The change in policy improved the well-being of that nation in the sense that
A)both producers of automobiles and consumers of automobiles in that nation became better off as a result.
B)the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation.
C)the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation.
D)even though total surplus in that nation decreased,it was still true that consumer surplus and producer surplus increased.

Question

Quizplus · Accepted Answer

With a free-trade policy, the country began to import automobiles, which provided consumers with a greater variety of cars at a cheaper price while creating competition for domestic automobile producers. This resulted in gains to automobile consumers in the nation that exceeded the losses of automobile producers. Therefore, choice C is the best answer. Choices A and B might be possible outcomes in some scenarios, but they are not guaranteed. Choice D is incorrect because if total surplus decreased, it is not possible that both consumer and producer surplus increased.

When a Certain Nation Abandoned a Policy of Prohibiting International