Week_12.InternationalTrade.2010

Week_12.InternationalTrade.2010 - Last classes(Monday,...

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Last classes (Monday, Wednesday and Monday next week) The Final Exam – When?: Thursday, December 9 th - 9 - 12 Where?: in various locations (check the intranet) What format? 40 MC and 2 short answer Help?: Review class next Monday Dec 6 th , and also on Wednesday Dec 8 th 12 noon – 2 p.m. in AC223 TA’s will do office hours this week and next. Tutorials? This is the last week (extra copies in TA office) 1
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Public Goods Think about “rivalry” and “excludability” Public goods are: - non-rival (collective consumption, or marginal cost of accommodating an extra consumer = 0) - non-excludable (if one consumer has access, all consumers have access; therefore, free rider problem) - everyone would benefit from having the good, but no one wants to pay for it. - - therefore, private markets generally cannot sell the good to individual consumers (i.e., market failure) 2
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Excludable Non-excludable Rival Private Goods: -chocolate bar, haircut Common-property resources: fisheries, lakes and streams Non- rival Art galleries, movies, roads, bridges, cable TV signal Public Goods: National defence, public health, police, justice, mosquito spraying, knowledge Solution: governments should provide or pay others to provide and raise revenues by taxation to pay…. .but how does government determine how much of each public good should be provided? 3
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How much of a public good? 4 Quantity of Public Good 100 100 Frank’s MU Quantity of Public Good 100 100 Overall MU 100 100 John’s MU Quantity of Public Good
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If Frank has MU F = 100 - Q F And John has MU J = 100 – Q J And MC = 2Q What is the optimum value of Q 5
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6
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Optimum: sum of marginal benefits = marginal cost 7
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Another example: 10 people want to reduce mosquitos. Value of mosquito spraying would be U = 50Q – Q 2 for each, so MU = 50 – 2Q. MC of spraying is $100 (total cost is $100 x Q). (a) will individuals purchase spraying? (b) How much spraying should happen? 8
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How would government determine MU’s? 9
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Week 12 – ECMA04 International Trade Exports – goods and services sold to other countries Imports – goods and services purchased from other countries 10
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Barriers to trade: Tariff – a tax on imported product Quota – a limit imposed on the total value or quantity of a good that can be imported each year Other possible barriers to trade: - Preferential government purchasing arrangements - Product inspection and labeling requirements 11
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Does trade matter to Canada? About 40% of the goods and services we produce each
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This note was uploaded on 08/17/2011 for the course ECON A04 taught by Professor Mk during the Fall '07 term at University of Toronto.

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Week_12.InternationalTrade.2010 - Last classes(Monday,...

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