Economics 10a Chapter 9: Chapter 9 - International Trade
10 Feb 2014
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Document Summary
When a country becomes an importer of a good, domestic consumers of the good are better off, and domestic producers of the good are worse off trade raises the economic well being of a nation in the sense that the gains of the winners exceed the losses of the losers trade can make everyone better off, but gains usually divided unequally tariff: tax on imported goods, raises price of imported textiles above world price tariff reduces the quantity of imports and moves the domestic market closer to its equilibrium without trade consumer surplus decreases, producer surplus increases, government revenue increases, total surplus decreases (deadweight loss) tariff encourages domestic producers to increase production by making it profitable, encourages domestic consumers to reduce consumption import quotas international trade also increases variety of goods, lower costs through economies of scale (production in large quantities), increased competition, enhanced flow of ideas.
