Final answer:
Gains from trade are greater with more elastic supply, and producers can benefit from trade even with perfectly inelastic supply. The truth of whether consumer surplus decline exceeds the rise in producer surplus in perfectly inelastic supply scenarios may vary. Relative prices and exchange rates significantly affect exports.
Step-by-step explanation:
For each of the following statements concerning a country that exports a good abroad, we can determine if they are true or false based on the understanding of elasticity and the effects of trade.
The greater the elasticity of supply, the greater the gains from trade. True
If supply is perfectly inelastic, the fall in consumer surplus would exceed the rise in producer surplus. Often the case, but this can depend on other factors such as the relative sizes of the changes in surplus. Without specific figures, this is too general to definitively label as true or false.
Producers can still benefit from trade even if supply is perfectly inelastic. True, as selling at higher international prices would increase producer revenue.
An elastic supply implies a high responsiveness to changes in price, leading to greater gains from trade due to the ability to increase production significantly when prices are favorable. On the other hand, when supply is perfectly inelastic, the quantity supplied does not change with price; however, producers can benefit by selling the same quantity at a higher price due to international demand.
Relative prices and productivity breakthroughs also play a role in exports. A country's exports are likely to rise if its goods are relatively cheaper and may fall if goods become more expensive, for instance, due to unfavorable exchange rate changes.
When trade barriers are imposed and the price rises to PNoTrade, the producer surplus typically increases while the consumer surplus decreases, as demonstrated in Steps 6 to 8.