4. International trade (Exports and Imports)

Exports

When the world price is above equilibrium, the country will ____ the product, which is when we sell our products to other countries.

50, 30

In the diagram above, at the world price of $12, the domestic supply is __ units and the domestic demand is only ___ units so this country can export the difference between supply and demand to other countries

supply

The exports are equal to the excess

20

In the diagram above the exports =

consumer surplus

the area above the price and below the demand.

10, A + B

Without trade, the price is ___ so the consumer surplus is ____

12, 30, A

with trade, the price is ___ and domestic consumers are buying a quantity of __ so consumer surplus is __

producer surplus

the area below the price but above the surplus

10, C

without trade, the price is __ so the producer surplus is __

12, 50, B + C + D

with trade, the price is __ and domestic producers are selling a total quantity of __

A + B, A, -B

consumer surplus before trade, after trade, change

C, B + C + D, B +D

producer surplus before trade, after trade, change

tariff

a __ is a tax on imports that is designed to help domestic businesses

import

When the world price is below the equilibrium, the country will __ the product, which is when we buy goods from other countries.

100, E

The government tariff revenue is the tariff multiplied by the imports (because the government doesn't tax the domestic businesses). This would be __ which is the rectangle __

pro, increased variety of goods

when there is more than 1 type of good on the market

pro, Economies of Scale

when producing in bulk lowers your costs.

pro, Increased competition

good for consumers (we get better prices)

pro, Enhanced flow of ideas

we can learn from each other

con, jobs argument

free trade can hurt some domestic jobs.