Trade Barriers

Trade Barriers - Econ Trade Barriers Supply curve cost of...

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Econ Trade Barriers 10/6/11 Supply curve: cost of supplying that good it is called a private cost (cost to the company) but we are not including social costs (companies polluting the air, or other things that may harm the society it is a long term cost) in this number The government makes them change their production so that the price of the cost goes up so that it more actively effects the private and social costs of the product This doesn’t happen very often because people prevent the government of imposing restrictions The Welfare Effects of Trade Barriers We apply the tools of welfare economics to answer the questions: Who within the country benefits from trade?  Who does trade harm? PW  = the  world price  of a good, the price that prevails in world markets PD  = domestic price without trade If  PD  PW country has comparative advantage in the good  under free trade, country exports the good because the world price is more  expense than their domestic so they want to raise it and sell it overseas to  foreign buyers, then the price goes up since, once the country decides to 
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This note was uploaded on 11/16/2011 for the course ECON 1011 taught by Professor Irenefoster during the Fall '11 term at GWU.

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Trade Barriers - Econ Trade Barriers Supply curve cost of...

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