When a nation exports a good, its surplus increases, and when it imports a good, its surplus increases

Economics Dec 13, 2020

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

Expert Solution

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.

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