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Imports
produced abroad, but sold domestically
Exports
produced domestically, but sold abroad
Without international trade:
price is set domestically (domestic price)
With internation trade:
price is set by world price
World price is:
the price for a good in the internation marketplace
If domestic price is LESS than world price:
Will become and exporter, country has a comparative advantage, domestic producers will be better off
If domestic price is GREATER than the world price:
will become an importer, world has comparative advantage, domestic consumers will be better off
Domestic producers will be worse off if:
domestic price is greater than world prices
Domestic consumers will be worse off if:
domestic price is less than the world price
Tarrifs are:
taxes on imports and raise domestic price
Tariffs will reduce:
domestic quantity demanded
Tarrifs will increase:
domestic quantity supplied
Tariffs raise domestic price, bringing:
more producers into the market driving domestic consumers out of the market
decrease
tariffs cause imports to:
