10 Government and Trade Student Copy

10 Government and Trade Student Copy - Government and Trade...

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1 Government and Trade Part of Chapter 12
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2 At the end of this section you should be able to: Evaluate the gains and losses from exporting and importing countries Evaluate and define the effect of an import quota and tariff We are going to apply trade theory to determine  We are going to apply trade theory to determine  welfare for exporting and importing countries.  We will  welfare for exporting and importing countries.  We will  use aspects from the world market for each good. use aspects from the world market for each good.
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3 Exporting Country Without trade our exporting country has a market for airplanes as described in the graph. P (in millions) Q S D Q*=400 P*=80 Recall, Q* is not only where the  exporting country is producing but  also where they are consuming.
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4 Exporting Country Suppose the world market determines a world price of 100 million for an airplane. This world price is where world supply = world demand. -
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This note was uploaded on 12/12/2011 for the course ECON 2306 taught by Professor Bailiff during the Spring '08 term at UT Arlington.

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10 Government and Trade Student Copy - Government and Trade...

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