ECO-2013 Lecture Notes - Lecture 18: Trade Restriction, Deadweight Loss, Comparative Advantage
Document Summary
Realize the size and growth of trade for the united states: 2. Explain why specialization and trade generation gains: 3. Apply supply and demand analysis to international trade: 4. Describe the kinds of trade barriers and their effects: 5. Recognize reasons for implementing trade restrictions: 6. Gains from specialization and trade: comparative vs. absolute advantage: Absolute ad(cid:448)a(cid:374)tage does (cid:374)ot; it si(cid:373)pl(cid:455) (cid:373)ea(cid:374)s (cid:862)(cid:449)ho (cid:272)a(cid:374) produ(cid:272)e (cid:373)ore(cid:863: (cid:862)rules(cid:863) Make and trade away the good for which you have a comparative advantage. You have a comparative advantage if you have a lower opportunity cost. Us consumers pay a higher world price. Us producers receive a higher world price. Us consumers pay a lower world price. Us producers receive a lower world price. The benefits outweigh the costs; a net gain exists. The economics of trade restrictions: main point: Generally, any trade restriction will reduce quantity, increase consumer prices, and create a deadweight loss.
