Question

2. Winners and losers from free trade Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of meekers is $40. Suppose that the world price of meekers is $39. 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 True False Meekertownian consumers were worse off without free trade than they are with it. Meekertownian producers were better off without free trade than they are with it. True or False: When a country is too small to affect the world price, allowing free trade will never increase total surplus in that country, regardless of whether it imports or exports as a result of international trade. True False

Answer 1

Answer:

In the absence of international trade, the domestic price of meekers is $40. Suppose that the world price of meekers is $39.

When the world price is lower than the domestic price the country imports and domestic price goes down

If Meekertown allows free trade,then it will import meekers

Meekertownian consumers were worse off without free trade than they are with it.-TRUE

Meekertownian producers were worse off without free trade than they are with it.- FALSE

True or False:

When a country is too small to affect the world price, allowing free trade will never increase total surplus in that country, regardless of whether it imports or exports as a result of international trade.-FALSE

Explanation: