chapter 9: International trade

Domestic demand curve

shows the quantity of a good that all domestic consumers aded togethe plan to buy at each price

Domestic supply curve

shows the quantity of a good that all domestic suppliers added together plan to sell at each price

Export

to sell goods or services to foreign buyers, countries will export if the world price is higher than the domestic price

effect of exporting

consumers lose CS, producers gain PS

Imports

to buy goods or services from foreign sellers, countries will import if the world price is lower than the domestic price

effects of importing

consumers gain CS, producers lose PS

Import quota

limits the quantity of a good that can be imported

Tariff

tax on imported goods, increases their trade costs

effect of tariffs on market equilibrium

higher price, higher domestic production, lower imports, lower quantity demanded

welfare effects of tariffs

winners: domestic producers, government

losers: consumers, overall welfare