When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer 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 abandons a no-trade policy and adopts a free-trade policy, it opens up to international trade and becomes an importer of a particular good. This leads to an increase in the supply of the good in the market, which leads to a decrease in the price of the good. As a result, consumers benefit from a higher consumer surplus, as they pay less for the good. Furthermore, the lower price also leads to an increase in quantity demanded, which increases the total surplus in the market. Therefore, both consumer surplus and total surplus increase in the market for that good.

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