Class Notes (808,131)
Canada (493,086)
Economics (1,563)
ECO102H1 (155)
Jack Carr (32)
Lecture 42

Lecture 42-Tariffs

4 Pages
Unlock Document

University of Toronto St. George
Jack Carr

th Tuesday, April 6 , 2010 Canada does not have comparative advantage in production of textiles Before trade (BT) P BT> PW Q BT= domestic quantity demanded/supplied After trade (AT) P AT= PW Q SAT= Domestic quantity supplied Q D = Domestic quantity demanded DAT S Q AT - AT= Imports Terms of Trade Index of export prices Index of import prices Insight: If terms of trade increaseuntry is better off Tariffs Definition: tax imposed on imported goods Why do countries impose tariffs? To protect import-.42509L3JL3/:897L08³850.L,OL39070898´ Example: (1) Country imports good (and also produces good domestically) (2) Country is small and takes the world price as given Before Tariff PD= domestic price (= world price) QS= domestic quantity supplied QD= domestic quantity demanded Q D Q =Simports After Tariff P 1 = new domestic price = world price + D 1 tariff Qs = domestic quantity supplied > Qs Q D1= domestic quantity demanded < Q D 1 1 Q D = Q S imports (which decline) Revenues from tariff = [Q 1± Q ] * Tariff D S (Shaded area) Politics of Tariff Reductions (Freer Trade) Tariff Reduction 1. Relatively few workers lose jobs and lobby against freer trade suffer big losses => 2
More Less

Related notes for ECO102H1

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.