Why Nations Trade
World Price and Trade
- •
- •
With Pw below domestic equilibrium, the country imports (Qd - Qs)
Importing Country Effects
Tariffs
Tariff raises domestic price, reducing imports from (Qd₁-Qs₁) to (Qd₂-Qs₂)
Effects of a Tariff
Tariff DWL
Import Quotas
Comparing Tariffs and Quotas
Arguments For and Against Trade Barriers
Export Subsidies
Worked Example
- •
- •
AP Exam Tips
- •
- •
- •
- •
- •
Common Mistakes
- •
- •
- •
- •
Unit 2 topics
Unit 2 overview2.1Changes in Demand2.10Tax Incidence and Deadweight Loss2.11Price Controls: Ceilings and Floors2.12International Trade and Public Policy2.2Changes in Supply2.3Price Elasticity of Demand2.4Price Elasticity of Supply2.5Cross-Price Elasticity of Demand2.6Income Elasticity of Demand2.7Consumer Surplus2.8Producer Surplus2.9Market Equilibrium and Efficiency