Question

If the domestic price in country A is higher than the world price before trade, how does introducing international trade affect its citizens’ consumer surplus?


Consumer surplus decreases

Consumer surplus remains the same

Consumer surplus increases

It only affects producer surplus
That is correct.

Answer 1

When the domestic price in country A is higher than the world price before trade, introducing international trade generally allows consumers in country A to purchase goods at the lower world price. This leads to an increase in consumer surplus.

Therefore, the correct answer is:

**Consumer surplus increases**.