2. Winners and losers from free trade Canasder the martet te meers n he my nmy e

Question

2. Winners and losers from free trade Canasder the martet te meers n he my nmy ececrtoen n international trade, the domestic price of meekers is $25. Suppose that the world price of meekers is $23. Assume that Meekertown is too small to influence the world price of meekers once it enters the international market. If Meekertown allows free trade, then it will meekers. Given current economic conditions in Meekertown, complete the following table by indicating whether each of the statements is true or false. Statement Meekertownian consumers are better off under free trade than they were before. True False r off without free trade than the it. True or False: When a country is too small to affect the world price, allowing free trade will surplus in that country, regardless of whether it imports or result of international trade False

Explanation / Answer

1) After free trade, price is $ 23 at which quantity demanded is greater than quantity supplied. So, there will be import of meekers.

2) True because consumer surplus increases when price falls.

3) True because free trade reduces their demand of goods.

4) False.

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