When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good,
A)consumer surplus increases and total surplus increases in the market for that good.
B)consumer surplus increases and total surplus decreases in the market for that good.
C)consumer surplus decreases and total surplus increases in the market for that good.
D)consumer surplus decreases and total surplus decreases in the market for that good.

Question

Quizplus · Accepted Answer

When a country becomes an exporter, domestic producers can sell more at higher prices, increasing producer surplus. Consumer surplus decreases because domestic consumers pay higher prices. However, the gains from trade (increased producer surplus) outweigh the losses in consumer surplus, leading to an overall increase in total surplus.

When a Country Abandons a No-Trade Policy,adopts a Free-Trade Policy,and