A country is not involved in international trade, and its domestic market price is Pd. It then chooses to enter free trade, causing the market price to move up to the world price (Pw). What effect does this have on consumer surplus and producer surplus when the economy enters free trade?
- ADomestic consumers gain Z only.
- BDomestic consumers lose X + Y.
- CDomestic producers gain Z only.
- DDomestic producers lose X + Y + Z.