24 Trade Barriers Handout

24 Trade Barriers Handout - Trade u market for a good...

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1 PS CS u no trade - price where Q D = Q S in domestic market Trade u market for a good produced domestically and abroad u domestic demand Quantity Price (per unit) D DOMESTIC u domestic supply S DOMESTIC P NT Q NT u no trade - price where Q D in domestic market u consumption increases, domestic production decreases Trade Quantity Price (per unit) D DOMESTIC S DOMESTIC P NT Q NT u trade - world price where Q D = Q S in world market u consumers and firms price-takers World P FT Price u imports (exports) determined by difference between domestic demand and supply Q D Q S Imports u gain in CS u loss in domestic PS u domestic total surplus increases u no trade - price where Q D in domestic market Trade Quantity Price (per unit) D DOMESTIC S DOMESTIC P NT Q NT u trade - world price where Q D = Q S in world market u consumers and firms price-takers World P FT u imports (exports) determined by difference between domestic demand and supply
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2 Imports Tariff Quantity Price (per unit) D DOMESTIC S DOMESTIC World Price P FT
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24 Trade Barriers Handout - Trade u market for a good...

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