Consider a market for badminton rackets. Suppose all of the rackets are identical and that the buyers and sellers areprice-takers. The domestic equilibrium price of a badminton racket in the United States is$85 and the world price is$100.

From theU.S.'s perspective, initially the market consists solely of U.S. buyers and sellers. If the U.S. government decides to open its economy to freetrade, it becomes an

of rackets.

In thiscase, the U.S. suppliers will

decrease

not change

increase

their production and the U.S. consumers will

not change

increase

decrease

their quantity demanded. This situation leads to an

excess supply

excess demand

of badminton rackets in the U.S.

Based on the abovescenario, which of the following statements regarding winners and losers from free trade istrue? (Check all that apply.)

A.

The U.S. buyers are worse off because they are purchasing fewer badminton rackets at a higher price per unit.

B.

The U.S. producers are worse off because they are selling fewer badminton rackets at a lower price per unit.

C.

The U.S. producers are better off because they are selling more badminton rackets at a higher price per unit.

D.

The U.S. buyers are better off because they are purchasing more badminton rackets at a lower price per unit.

In the abovesituation, suppose it is possible to tax the producers of a badminton racket and transfer the revenues to the domestic consumers of the racket. In thiscase, the U.S. is

better off

worse off

as a whole because of trade.