1 Block 2. Extensions and Applications. Block 2. Extensions and Applications 2.4. Government policies 2.5. International trade 2.6. Market failures
2 Block 2. Extensions and Applications 2.4. Government policies • Controls on prices • Taxes • Subsidies Block 2. Extensions and Applications 2.5. International trade • The world price, imports and exports • Effects of a tariff • Arguments for restricting trade
3 Block 2. Extensions and Applications 2.6. Market failures • Externalities • Public goods and common resources • Asymmetric information Bibliographical References ° N. Gregory Mankiw (2015): Principles of Economics. 7th edition. Cengage Learning. Part II: SUPPLY AND DEMAND I: HOW MARKETS WORK. ± Chapter 6. Supply, Demand and Government Policies. Part III: SUPPLY AND DEMAND II: MARKETS AND WELFARE. ± Chapter 8. Application: The Costs of Taxation. ± Chapter 9. Application: International Trade. Part IV: THE ECONOMICS OF PUBLIC SECTOR ± Chapter 10. Externalities. ± Chapter 11. Public Goods and Common Resources.
4 Bibliographical References ° Paul Krugman, Robin Wells and Kathryn Graddy (2015) “Essentials of Economics” 3rd edition. Worth Publishers-Macmillan Education. ± Chapter 4. Price Controls and Quotas: Meddling with Markets. // The Market Strikes Back. ± Chapter 5. Elasticity and Taxation. ± Chapter 9. Externalities and Public Goods. Market Equilibrium
5 Price Above Its Equilibrium Level Creates a Surplus Price Below Its Equilibrium Level Creates a Shortage
6 Scissors Model The Law of Supply and Demand Equilibrium and Shifts of the Demand Curve Equilibrium and Shifts of the Supply Curve Scissors Model The Law of Supply and Demand
7 Simultaneous Shifts of the Demand and Supply Curves Scissors Model The Law of Supply and Demand The Market for Apartments in the Absence of Government Controls
8 The Effects of a Price Ceiling The Market for Butter in the Absence of Government Controls
9 The Effects of a Price Floor An Excise Tax Paid Mainly by Consumers
10 An Excise Tax Paid Mainly by Producers Total Surplus
11 A Tax Reduces Consumer and Producer Surplus The Deadweight Loss of a Tax
12 Deadweight Loss and Elasticities Deadweight Loss and Elasticities
13 The Deadweight Loss of a Subsidy Consumer and Producer Surplus in Autarky
14 The Domestic Market with Imports The Effects of Imports on Surplus
15 The Domestic Market with Exports The Effect of Exports on Surplus
16 The Effect of a Tariff A Tariff Reduces Total Surplus
17 Trade and Economic Integration ° Preferential Trading Area ° Free Trade Area ° Customs Union ° Common Market ° Customs and Monetary Union ° Economic Union ° Economic and Monetary Union ° Political Union (?) The Arguments for Restricting Trade A. The Infant-Industry Argument B. The Unfair-Competition Argument C. The Jobs Argument D. The National-Security Argument E. The Protection as a Bargaining Chip Argument From GATT to WTO Cases: EU (EFTA/EEC), NAFTA, TPP, TTIP(?),…
18 The Debate: TTIP and CETA °
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