ECON 101 Lecture Notes - Lecture 16: Autarky, Economic Equilibrium, Economic Surplus
![ECON 101 Full Course Notes](https://new-docs-thumbs.oneclass.com/doc_thumbnails/list_view/2163518-class-notes-ca-ubc-econ-101-lecture8.jpg)
78
ECON 101 Full Course Notes
Verified Note
78 documents
Document Summary
Econ 101 - lecture #16 - international trade with importing and exporting countries. Before analyzing the benefits and costs of international trade, we first have to imagine a world where trade is not implemented. A country that does not trade is called an autarky. The domestic price adjusts to balance domestic demand and domestic supply. The sum of consumer surplus and producer surplus equals total surplus - everything is efficient. Pa is equilibrium price under autarky; qa is equilibrium quantity under autarky. Possibility about international trade raises a few important questions. When considering international trade, we have to consider global market along with domestic market. Global supply is the sum of supply functions of all trading countries. Global demand is the sum of demand functions of all trading countries. Pw is the equilibrium price in the global market; qw is the equilibrium quantity in the global market. Figure 1 offers a realistic depiction of the global marginal cost function (supply)