CH-9 PPT - Chapter9 Application: International Trade...

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Click to edit Master subtitle style Application: International Trade M icroeconomics P R I N C I P L E S   O F N. Gregory Mankiw Chapter 9
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Outline Compare a world without trade to a world with trade and no tariffs Compare a world with trade and no tariffs to a world with trade an tariffs
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$ Quantity Supply Demand P 1 Q 1 P W C B A No trade Consumer surplus = A Producer surplus = B + C Total surplus = A + B + C
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$ Quantity Supply Demand P 1 P W Q 3 Q 2 Trade and no tariff Imports Domestic consumption = Q2 Domestic production = Q3 Imports = Q2 – Q3
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$ Quantity Supply Demand P 1 Q 1 P W C B A D E Q 3 Q 2 Trade and no tariff Consumer surplus = A + B + D + E Producer surplus = C Total surplus = A + B + D + E + C
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$ Quantity Supply Demand P 1 Q 1 P W D E F D E Q 3 Q 2 I J Trade and no tariff Increase in total surplus = D + E
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Outline Compare a world without trade to a world with trade and no tariffs Compare a world with trade and no tariffs to a world with trade an tariffs
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$ Quantity Supply Demand P W Q 3 Q 2 PW + T Q 5 Q 4
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WITHOUT TARIFF WITH TARIFF CONSUMPTION Q 2 Q 5 PRODUCTION
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This note was uploaded on 09/25/2011 for the course BMGT 220 taught by Professor Bulmash during the Spring '08 term at Maryland.

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CH-9 PPT - Chapter9 Application: International Trade...

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