Compared to the no-trade situation, when a country exports a good
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A. B. C. D.Explanation
Domestic producers gain under export because only goods for which the international price is higher than the domestic price will be exported. Thus, the producer will receive a higher price abroad than it is receiving at home. Domestic consumers lose because producers will reduce their output for domestic consumption which will cause the price to rise. The gains outweigh the losses because the country will divert resources away from inefficient production to the efficient production of the exported goods.
Producers will be motivated to divert these resources by higher prices abroad.