week13-082 - International Trade Overview of Trade Open up...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 International Trade Overview of Trade Open up to trade, what happens to P and Q? Who gains and who loses? What if tariffs, quotas or other barriers to trade are erected? Leading Exporters and Importers in World Merchandise Trade -- 2005 3.7 Hong Kong 3.8 Hong Kong 3.9 Canada 4.6 Canada 6.3 Japan 7.7 Japan 8.1 China 9.8 China 18.0 EU 11.7 US 21.4 US 17.1 EU Imports (% world trade) Exports (% world trade)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Why Does Trade Take Place? Different pre-trade prices A Country has COMPARATIVE ADVANTAGE in a good if the product has a lower pre- trade relative price than is found elsewhere in the world. Sources of comparative advantage include tastes, demographics, market structure, government policy, technology, resource base and external economies. Autarky Equilibrium P* Q1 Price Quantity 0 S D Assumed that D and S were domestic D and S . Without trade price is P*; determined by domestic D and S P* is the AUTARKY price World Price is P w ; determined by world D and world
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

week13-082 - International Trade Overview of Trade Open up...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online