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Lecture 13

ECON 1000 Lecture 13: Week 7

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Department
Economics
Course
ECON 1000
Professor
Nick Rowe
Semester
Fall

Description
Econ 1000 – Week 7 – Lecture 13  Chapter9:  Canadianpricewilldropto worldprice becauseworld price is cheaper o Thisa movement alongthesupplydemandcurveandsupply curveto buy more andproduceless. o Increase consumersurplus o Decrease inconsumersurplus o But thegain in consumersuplusisbigger thanlossofproducer surplussothere is anover-allgain  If theworld price is higherthandomesticprices,generallytheywould alsoraise toworld price.  Thisprice raise doestwo things,theres a movementon demandcurve, andtheyconsumeless becauseprice is higher, butthe movementon supplycurveis fartherto the rightwhich means more are produced.  There’snot reallya surplusinproducebecauseit gets exported.  Consumersurpluswoulddecreasewhilethe producersurpluswould increase  The gainin producersurplusislarger thanthe lossin consumer surplus  Importsare good andexportsare a necessaryevil.  Whenwe tradeusuallyeverythingis cheaperabroad.  Free tradecan alsoleadto unemployment.  One way thatwe restrictfree tradeis throughtariffs(taxeson
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