Copyright © 2011 Cengage Learning 9 9 Application: International Trade
Copyright © 2011 Cengage Learning 9 Application: International Trade.
Dec 26, 2015
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Copyright © 2011 Cengage Learning
99Application: International Trade
Figure 1 The Equilibrium without International Trade
Consumersurplus
Producersurplus
Priceof olive oil
0 Quantityof olive oil
Domesticsupply
Domesticdemand
Equilibriumprice
Equilibriumquantity
Copyright © 2011 Cengage Learning
Figure 2 International Trade in an Exporting Country
Priceof olive oil
0Quantityof olive oil
Domesticsupply
Priceaftertrade World
price
DomesticdemandExports
Pricebeforetrade
Domesticquantity
demanded
Domesticquantitysupplied
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Figure 3 How Free Trade Affects Welfare in an Exporting Country (1)
D
C
B
A
Priceof olive oil
0 Quantityof olive oil
DomesticsupplyPrice
aftertrade World
price
Domesticdemand
Exports
Pricebefore
trade
Producer surplusbefore trade
Consumer surplusbefore trade
Copyright © 2011 Cengage Learning
Copyright © 2010 Cengage Learning
Figure 3 How Free Trade Affects Welfare in an Exporting Country (2)
Copyright © 2011 Cengage Learning
Figure 4 International Trade in an Importing Country
Priceof olive oil
0 Quantity
Priceafter
trade
Worldprice
of olive oil
Domesticsupply
Domesticdemand
Imports
Domesticquantitysupplied
Domesticquantity
demanded
Pricebeforetrade
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Figure 5 How Free Trade Affects Welfare in an Importing Country (1)
C
B D
A
Priceof olive oil
0 Quantityof olive oil
Domesticsupply
Domesticdemand
Priceafter trade
Worldprice
Imports
Pricebefore trade
Producer surplusafter trade
Consumer surplusafter trade
Copyright © 2011 Cengage Learning
Copyright © 2010 Cengage Learning
Figure 5 How Free Trade Affects Welfare in an Importing Country (2)
Copyright © 2011 Cengage Learning
Figure 6 The Effects of a Tariff (1)
Priceof olive oil
0 Quantityof olive oil
Domesticsupply
Domesticdemand
Pricewith tariff Tariff
Importswithout tariff
Equilibriumwithout trade
Pricewithout tariff
WorldpriceImports
with tariff
QSQS QD QD
Copyright © 2011 Cengage Learning
Copyright © 2010 Cengage Learning
Figure 6 The Effects of a Tariff (2)
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Figure 7 The Effects of an Import Quota (1)
A
E'C
B
G
D E" F
Priceof olive oil
0 Quantityof olive oil
Domesticsupply
Domesticsupply
+Import supply
Domesticdemand
Isolandianprice with
quota
Importswithout quota
Equilibriumwith quota
Equilibriumwithout trade
Quota
Importswith quota
QD
Worldprice
Worldprice
Pricewithout
quota=
QS QDQS
Copyright © 2011 Cengage Learning
Copyright © 2010 Cengage Learning
Figure 7 The Effects of an Import Quota (2)
Copyright © 2011 Cengage Learning
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