Refer to the figure below to answer the following question.

Figure 7.2.3
-Refer to Figure 7.2.3. The graph shows the market for shoes in Canada. The world price of a pair of shoes is $20. With free international trade, Canadian consumer surplus ________ and Canadian producer surplus ________.
A)increases by area A + B; decreases by area B
B)increases by area B; decreases by area B
C)increases by area A; decreases by area B
D)decreases by area A + B; increases by area B
E)decreases by area B; increases by area A

Question

Refer to the figure below to answer the following question.
  
Figure 7.2.3
-Refer to Figure 7.2.3. The graph shows the market for shoes in Canada. The world price of a pair of shoes is $20. With free international trade, Canadian consumer surplus ________ and Canadian producer surplus ________.
A)increases by area A + B; decreases by area B 
B)increases by area B; decreases by area B 
C)increases by area A; decreases by area B 
D)decreases by area A + B; increases by area B 
E)decreases by area B; increases by area A

Quizplus · Accepted Answer

With free international trade, Canadian consumer surplus increases by the area A + B due to the lower world price, while Canadian producer surplus decreases by area B as domestic producers sell less at the lower price.

Refer to the Figure Below to Answer the Following Question