The importance of an economic model is that it allows us to:
x focus on the effects of only one change at a time.
build a complex and accurate model of the economy.
avoid opportunity costs.
build an accurate mathematical model of the economy.
20 Chapter 2
International Trade Versus Interregional Trade
international trade occurs for the same reasons as interregional trade
gains from technology and gains from trade
III. Trade in an Individual Product
In addition to the production and consumption side deadweight losses, what are some of the
other potential costs of tariffs?
Tariffs increase domestic production and employment at the cost of greater
inefficiency and higher prices. Production and distribu