ECO 201 Lecture 16: ECO 201 lecture 16
Document Summary
Overall, trade increases total surplus in the us. The total accounts for 2-8% of the gdp. Sometimes, government decides to restri(cid:272)t trade to (cid:862)prote(cid:272)t(cid:863) u(cid:374)ited tates jo(cid:271)s (a(cid:373)o(cid:374)g other reasons). There are two types of trade restrictions; tariff restrictions and quotas restrictions. Tariff: shifts (cid:1845)(cid:1371) by the amount of the tariff. The amount of the tariff (cid:1843)(cid:3031)(cid:1373) and (cid:1843)(cid:3046)(cid:1371), then number of imports (cid:1373) (cid:1829)(cid:1845) (cid:1842)(cid:1845) (cid:1830)(cid:1838) J: lost cs because consumers buy fewer units. W: lost cs because higher cost versus produces now make units. Legal limit on the number of units allowed to be imported. We can import as much as we want without affecting price (cid:1845)(cid:3043)(cid:3045)(cid:3030)(cid:3032)=(cid:1845) (cid:3042)(cid:3047) (cid:3032)(cid:3045)+(cid:1845)= (cid:1845)(cid:3044)(cid:3048)(cid:3042)(cid:3047)=(cid:1845)+(cid:1845)(cid:1867)(cid:1865)(cid:1857) (cid:1858)(cid:1857)(cid:1856) (cid:1865)(cid:1867)(cid:1873)(cid:1866)(cid:1872) . Under the quota, the (cid:1845) is just (cid:1845) shifted to the right by the amount of the quota. After the quota, the prices rises to (cid:1842)(cid:3044)(cid:1372) (cid:1829)(cid:1845)(cid:1373) to (cid:1839)(cid:1846) from mtrwkj (cid:1372) -rwkj (cid:1842)(cid:1845)(cid:1371) to rg from g (cid:1372) +r.
