Question

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither importing nor exporting TVs. We can conclude that producer surplus in Aquilonia is now

Answer 1

Answer:

higher in the steel market, lower in the rice market, and unchanged in the TV market

Explanation:

Producer surplus can be defined as the variance between the amount an individual or nation is willing to take for certain quantity of a product versus the amount they receive when the goods are sold at the market value. For the nation of Aquilonia to be importing rice that means producer surplus is higher because the variance is low, it will export rice because the producer variance is low, and hence it wants to give to other countries. But since it is neither exporting nor importing TV, that means that the producer surplus remained the same even after the change in policy.