Asked by Carlos Iturralde on Jun 28, 2024
Verified
The nation of Spritzland used to prohibit international trade, but now trade is allowed, and Spritzland is exporting wristwatches. Relative to the previous no-trade situation, total surplus in the market for wristwatches in Spritzland has increased.
Total Surplus
The sum of consumer surplus and producer surplus, representing the total benefits to society from the production and consumption of a good or service.
International Trade
The trade of products and services beyond international frontiers or territories.
Exporting
The process of selling and shipping goods or services from one country to another country.
- Understand the impact of international trade policies on domestic and global economies.
- Identify the conditions under which trade can increase or decrease consumer and producer surplus.
Verified Answer
SR
Sophie ReimerJul 01, 2024
Final Answer :
True
Explanation :
Allowing international trade and exporting wristwatches would increase total surplus in Spritzland's market for wristwatches by opening up new markets, increasing sales, and enabling the country to specialize in the production of goods for which it has a comparative advantage, thus improving efficiency and gains from trade.
Learning Objectives
- Understand the impact of international trade policies on domestic and global economies.
- Identify the conditions under which trade can increase or decrease consumer and producer surplus.