MGCR 382 Lecture 10: Lecture 10
17 Feb 2012
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Document Summary
Chapter 9 formulation of national trade policies (cont. ) Objective 4 - describe the major tools countries use to restrict trade (cont. : effects of tariffs. Tariffs and quotas and trqs (tariff rate quotas) change the domestic economy s structure by encouraging: Domestic consumers (who must now pay a higher price for a less available product) to either switch to cheaper domestic made goods or stop buying good. Domestic producers increase their output of goods that compete with the imported goods as demand switches from foreign to domestic made goods. Tariffs, quotas and trqs exact a cost on countries because they lessen the gains from trade. Ex: effect of an import tariff on foreign made suvs on demand for us made. Suvs - (see figure 9-3 and example on page 253: non tariff barriers. See figure 9. 5 in textbook at page 258 - quantitative restrictions and other non-ttariff barriers. Non-tariff barriers (ntb) are the 2nd category of governmental controls on international trade.
