Asked by stanley owuama on Apr 27, 2024
Verified
For Country A, the world price of textiles exceeds the domestic equilibrium price of textiles. As a result, international trade allows sellers of textiles in Country A to experience greater producer surplus than they otherwise would experience.
Producer Surplus
The difference between what producers are willing to accept for a good or service and the higher price they actually receive.
International Trade
Swapping goods and services across the borders of different countries or regions.
World Price
The international market price at which goods, services, or commodities are bought and sold.
- Determine the circumstances that lead to an increase or decrease in consumer and producer surplus through trade.
- Investigate the potential dividends of free as opposed to restricted commerce.
Verified Answer
PT
Phuong Thao HoangApr 29, 2024
Final Answer :
True
Explanation :
When the world price of textiles exceeds the domestic equilibrium price, it means that producers in Country A can sell their textiles at a higher price on the international market than they could domestically. This leads to an increase in producer surplus because producers are receiving a higher price for their goods, which translates to greater profits.
Learning Objectives
- Determine the circumstances that lead to an increase or decrease in consumer and producer surplus through trade.
- Investigate the potential dividends of free as opposed to restricted commerce.