ECON 2010 Chapter Notes - Chapter 9: Comparative Advantage, Economic Surplus, Amay
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ECON 2010 Full Course Notes
Verified Note
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Document Summary
The effect of a world price to a small exporting domestic economy: economies that allow trade and become exporters of goods and services benefit domestic producers (winners) to the disadvantage of domestic consumers (losers). Trade nonetheless increases the well-being of an economy because the benefits outweigh the losses: small importing economies are also price takers and must adapt to the world price. The effect of a world price to a small importing domestic economy: economies that allow trade and become importers of goods and services benefit domestic consumers (winners) to the disadvantage of domestic producers (losers). Trade nonetheless increases the well-being of an economy because the benefits outweigh the losses: governments may implement taxes known as tariffs on imported goods and. Tariffs decrease the quantity of imports and increase domestic prices services. closer to equilibrium. International trade increases the variety of goods to a domestic economy.
