Econ 333 Oct 14 Ch 7

Econ 333 Oct 14 Ch 7 - Chapter 7: Tariffs, Trade Barriers...

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Chapter 7: Tariffs, Trade Barriers October 14, 2008
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Types of Tariffs revenue versus protective tariffs specific, compound, and ad valorem tariffs free alongside (FAS), free on board (FOB), and cost, insurance, and freight (CIF) The three methods of valuing imports are also extensively used in international business and are not just terms used by customs officials.
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Consumer/Producer Surplus Quick review of consumer and producer surplus. Effects of imports and exports for an individual product without trade barriers can be shown in terms of the changes in consumer and producer surplus.
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Small Country Imports at the World Price NoTariff D S
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Small Country Tariff D S P tariff P
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Terms of Trade Effect for a Large Country Large country can affect the world price Small country case: consumers pay all, producers (infinite elasticity) pay none Large country case like micro tax: lowers price to producers (foreign suppliers) and raises price to consumers So part of tariff burden falls on foreigners Still deadweight loss (total surplus lost > government revenue collected)
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Large Country, No Tariff Demand for Imports, Supply of Imports Price P Imports
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Large Country with Tariff Demand for Imports Supply of Imports Price P T P S Imports
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Econ 333 Oct 14 Ch 7 - Chapter 7: Tariffs, Trade Barriers...

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