ECON 200 International Trade (applying consumer and producer surplus)

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: