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Homework answers / question archive / When a nation exports a good, its surplus increases, and when it imports a good, its surplus increases
When a nation exports a good, its surplus increases, and when it imports a good, its surplus increases.
a) consumer; consumer
b) producer; producer
c) producer; consumer
d) consumer; producer
e) total; producer
The answer is c).
All else the same, consumer surplus decreases with the price of the good and producer surplus increases with the price of the good. When a nation exports a good, it is able to sell the good at a higher price in the world market, so producer surplus increases. When it imports a good, consumers are able to purchase a good at a lower price from the rest of the world, so consumer surplus increases.
