The world price can be higher than the domestic price; this generates exports rather than imports. Suppose we have such a situation in an open economy. True or false? i. Compared to a situation without any trade (i.e. without exports), consumer surplus is larger in the open economy. ii. Compared to a situation without any trade (i.e. without exports), domestic producer surplus is larger in the open economy. iii. Suppose the government imposed an export duty - a tax on each unit exported (this occurs in some countries for agricultural products). Then consumer surplus increases and domestic producer surplus decreases.
The world
True or false?
i. Compared to a situation without any trade (i.e. without exports),
ii. Compared to a situation without any trade (i.e. without exports), domestic
iii. Suppose the government imposed an export duty - a tax on each unit exported (this occurs in some countries for agricultural products). Then consumer surplus increases and domestic producer surplus decreases.
iv. If consumers suddenly prefer to consume more of the good, the price that they have to pay might still not change.
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