ch8_9notes - Trade Barriers in Action 1 The effects of(free...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Trade Barriers in Action 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The effects of (free) trade on production, consumption and prices For the importing country Imports are cheaper than the domestic pre-trade prices Trade increases domestic consumption But decreases domestic production For the exporting country Exports are more expensive than the domestic pre-trade price 2
Background image of page 2
The Effects of Trade on Well-Being of Producers, Consumers, and the Nation as a Whole 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Why do countries trade? Importing country Consumer surplus increases by areas a+b+d Producer surplus decreases by area a Net gain – areas b+d Exporting country Producer surplus increases by areas j+k+n Consumer surplus decreases by areas j+k Net gain – area n Both countries gain from free trade 4
Background image of page 4
Who wins and who loses from international trade? Winners Consumers in the importing country Producers in the exporting country Losers Producers in the importing country Consumers in the exporting country 5
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Tariffs – a classic trade barrier A tariff is a tax on imported products Tariffs are among the world’s oldest taxes and an important source of (government) revenue in the past Over the past 60 years governments of industrialized countries have reached a series of global agreements that have reduced tariffs GATT – the General Agreement on Tariffs and Trade (1947 – 1994) 6
Background image of page 6
Tariffs How low (or high?) are tariffs today? Non-agricultural products
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This document was uploaded on 12/04/2011.

Page1 / 20

ch8_9notes - Trade Barriers in Action 1 The effects of(free...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online