Question

N owed. This test can only be taken once. Force Completion This test can be saved and resumed later. The time will continue to run you leave the best Remaining Time: 48 minutes, 56 seconds. Question Completion Status → Moving to another question will save this response Question 9 Aquilonia has decided to end its policy of not trading with the rest of the world. When it and its trade restrictions, it discover nor exporting mgWhat can we conclude about consumer plus in Aquilo ? O a. It is now higher for innamon and rugs, but not steel O b. It is now higher for cinamon and steel, but notre OC. It is now higher for steel, lower forcamon, and the same forugs O d. It is now higher for cinamon, lower for veel, and then for rugs. Question 1 Moving to another question will save this response GA 3 30-2000 backspace OOOOO OCCUE NON buten ZA OO

Answer 1

d. It is now higher for cinnamon, lower for steel and same for rugs

Explanation:

Now the Aquilonia is importing cinnamon which means that the prices of cinnamon were higher in Aquilonia than the world price and it means now that they are low, consumers are better off since they can buy at lower price and producers are worse off since they have to sell at a lower price. consumer surplus increased

Similarly, now that they are exporting steel, it means it was cheaper in Aquilonia and now that its price meets the world price, steel is more expensive so now consumers are worse off because they have to pay a higher price and producers are better off because they can sell at a higher price, consumer surplus decreased.

They are neither exporting nor importing rugs and that means, either they like local mage lags only or prices of rags are similar to the local one and hence there is no profit at importing or exporting them. Consumer surplus is unchanged