Econ 101 Winter 2010 Lecture 15

Econ 101 Winter 2010 Lecture 15 - Click to edit Master...

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Unformatted text preview: Click to edit Master subtitle style Lecture 1 Economics 101 Microeconomics University of Michigan Winter 2010 Lecture 15 Lecture 1 22 Lecture 1 Chapter 8 of text Available on CTools Quiz this week in discussion Reading Problem Set 8 Lecture 1 33 Lecture 1 The Tariff Quantity Price/unit Domestic Demand Domestic Supply PWorld QS QD Imports PWorld +t QS QD Lost surplus from reducing consumption Lost surplus from increasing production DWL t Lecture 1 44 Lecture 1 Effects of the Tariff Tariff is a tax on imports n Disincentive to import n Imports fall Adjust on two margins: both constitute distortions from the efficient allocation of resources n Consume too little n Produce too much Lecture 1 55 Lecture 1 Who wins and who loses? The price that sellers receive rises n Increase in producer surplus The price that consumers pay rises n Decrease in consumer surplus Tariff revenue is collected n Revenue= Tariff * Imports n Revenue available to be distributed to the benefit of members of society DWL tells us that the consumer surplus loss exceeds the producer surplus gain plus the tariff revenue raised Lecture 1...
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Econ 101 Winter 2010 Lecture 15 - Click to edit Master...

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