Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland.
-Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $5,then the policy change results in a
A)$25 decrease in consumer surplus.
B)$20 increase in consumer surplus.
C)$25 decrease in producer surplus.
D)$20 increase in producer surplus.

Question

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. 
-Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $5,then the policy change results in a
A)$25 decrease in consumer surplus. 
B)$20 increase in consumer surplus. 
C)$25 decrease in producer surplus. 
D)$20 increase in producer surplus.

Quizplus · Accepted Answer

When Isoland allows international trade and the world price is $5, domestic consumers can buy peaches at a lower price, leading to a decrease in consumer surplus by $25 as they pay less for the same quantity.