When a country allows trade and becomes an importer of a good,
A)domestic producers become better off,and domestic consumers become worse off.
B)domestic producers become worse off,and domestic consumers become better off.
C)domestic consumers become better off,but the effect on the well-being of domestic producers is ambiguous.
D)domestic producers become worse off,but the effect on the well-being of domestic consumers is ambiguous.

Question

Quizplus · Accepted Answer

When a country allows trade and becomes an importer of a good, domestic producers face competition from the foreign producers, which lead to a decrease in domestic production and price of the good. Hence, domestic producers become worse off. On the other hand, domestic consumers benefit from lower prices and increased variety of goods. Therefore, domestic consumers become better off.

When a Country Allows Trade and Becomes an Importer of a Good