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As a result of outsourcing the relative demand for

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As a result of outsourcing, the relative demand for skilled workers will rise. This is because the activities still done at Home are more skill-intensive than before. The relative wage of skilled labor will increase due to outsourcing.
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12 PW+t PW Chapter 5 Tariffs Import Tariffs for a Small Country A D Price S S1 S2 D2 D1 Quantity No-trade equilibrium M 2 The deadweight loss is the loss to Home that is not offset by a corresponding gain a b d c a is a transfer from consumers to producers c is a transfer from consumers to government (b+d) is deadweight loss— losses not offset by other gains
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13 Import Tariffs for a Small Country Overall Effect of the Tariff on Welfare The overall impact of the tariff in the small country can be summarized as follows: Fall in consumer surplus -(a+b+c+d) Rise in producer surplus +a Rise in government revenue +c_______ Net effect on Home welfare -(b+d) The areas ‘b’ and ‘d’ in the above figure is the net welfare loss. We refer to this area as a deadweight loss —it is not offset by a gain elsewhere in the economy.
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Chapter 6 Non-tariff Barriers Import Quotas B A Quantity D Price S Price Imports M1 Foreign export supply, X* Home import demand, M P2 C No-trade equilibrium c a d b+d c b (a) Home market (b) Import market Foreign export supply with quota With the Quota, the Foreign export supply becomes vertical at the quota quantity The new Export Supply curve crosses the Import Demand curve at a new price and quantity of imports At the new higher price P2, Home Supply increases to S2, Demand decreases to D2 and imports fall to M2 Always have a deadweight loss of (b+d) like the tariff Consumers loses surplus of (a+b+c+d), producers gain (a). Welfare of Home depends on what happens to (c).
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