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15 April, 02:07

When a country is too small to affect the world price, allowing free trade will have a non-negative effect on total surplus in that country, regardless of whether it imports or exports as a result of international trade. a. True b. False

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  1. 15 April, 02:22
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    The correct answer is: True.

    Explanation:

    In economics and in general terms, the surplus (economic surplus or total welfare or marshaliano surplus) is the difference between the value of the goods and services produced by a community during a certain period of time and the value of the part of those goods and necessary services for the support (reproduction) of its inhabitants. The existence of surplus is a condition so that the general welfare of the citizens of a country or its number can increase.

    A surplus is, in turn, the result of the sum of two surpluses: the producer surplus and the consumer surplus. The consumer surplus is the "surplus" or monetary gain of the consumer when acquiring a product at a certain price, which is at the same time less than the estimated price or at the highest existing price (of the product) in the market. The producer surplus is the monetary amount that he receives as an "extra profit" outside of the production expense, when selling his product at a price higher than the one already available in the market. In other words, it is the money that is "left over" and said so, it is obtained as a gain (apart from the money that recomposes production expenses or satisfies other needs), from a price lower or higher than the one estimated to acquire a product.

    The surplus is the part of the production that is left over after covering the basic needs and current consumption. The surplus can be accumulated (stored), if it is converted into currency its saving is possible.
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