Summary
Summary Microeconomics Graphs Explained
Detailed graphs explaining principles of economics.
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
Content preview
TARIFFS & IMPORT QUOTASDomestic D & S D si s w/ International trade
(Autarky )
# wonamut.es#..oo
so
S s
50
40
40
Cs
30
.
30 CS
20
! .
20 60 So I 00
40
°
Domestic production
= 20 Units
°
100 Units Imported
o international trade benefits
mostly
consumers
Import Quota of 40 Units
Tariff of $10 per
# ,o¥i
so
unit
so D
/
40
40
CS
30
30 CS
20
20
,
too
20 40 60 80
S
20 40 60 So too
•
Consumer Surplus decrease '
o
on
°
Producer Surplus increases
every unit imported , price is
$10 ( the the tawtt)
raised
by amount
of
°
Quota decreases
supply
o
has Ps
same
impact as
quota on Css:
Increases domestic price BIT generates Revenue & DWL
revenue
°
TARIFF =
amount of tariff
quantity imported
x
•
decrease, Cs =
$10 x 40 =
$400
> decrease , Ts
Increase , ps
'
, Socially efficient quantity is where MSB =
MSC
CAP N TRADE ( Marketable permits)
failure (overprotection)
negative
→
externality
o
market
↳ SO , ①
Caps the
gov .
quantity of production
2
Sets up market for firms to trade permits
firms w/ abatement technology all their
permits
Cme then
gov Sets the quantity
o
and
price adjusts
.
the
both lead to
taxi then the efficient
. o
gov . sees
price and
quantity adjusts socially
equilibrium
Dumping when
foreign firm sells its exports at lower than
:
price
the cost of production
cost of production > export price
Vouchers → Increase MPB
, TAXES -
TAX ON SELLERS
shifts supply
o
curve left
by the tax
think
°
S
:
it increases production costs
+
tax
°
Increases
g
min .
supply by amt of tax
Quantity
°
exchanged decreases ,
consumer price Increases
Ear
consumer price
a.
Buyers
EQI
sellers less than before)
Price ( after tax)
+ a× pay more ,
relieve
D
sellers
relieved
by
TAX ON BUYERS
Shifts
°
demand curve left
by the tax
0 think :
it decreases WTP
+
tax
°
Increases
g
min .
supply by amt of tax
Quantity
°
tax
exchanged decreases ,
consumer price Increases
consumer price
Buyers
EQI
Sellers less Ahan before,
Price relieved *.
pay more ,
relieve
sellers D
by D + tax
Summary doesn't matter whether suppliers 1 buyers write them to the
:
pay
tax ,
outcome is
equivalent
↳ tax drives a
wedge
( what Sellers Riehl diff amt of the tax what the
gov
receives
buyers pay than
-
the
.
more , =
S
( don't need to shift the curve, jut drive a
wedge)
••
B
Buyer price =
$2.65
tax $1
wedge = •
D
sellers relieve = $1.65
D
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller keeritpooni. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for CA$11.09. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53022 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now