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Economics SL IB > 3.3 Trade Barriers > Flashcards

3.3 Trade Barriers Flashcards

1
Q

What is a Tariff?

A

A tax on imports.

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2
Q

What is the A - b - c - D of a tariff?

A

^ costs v Supply ^ price v Qd.

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3
Q

How is tariff represented on a trade diagram?

A

Pw + t = Sw + t line above the Pw line but below the origin.

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4
Q

What is the long run affect of a tariff?

A

If you tariff a country’s products they might retaliate and tariff yours back. (trade war)

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5
Q

What is the short run affect of a tariff?

A

Producers gain = fewer imports

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6
Q

What is protectionism?

A

shielding a country’s domestic industries from foreign competition by taxing imports.

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7
Q

How is a decrease in Qd represented in trade?

A

Increase S dom Q1 to Q3
or
Decrease D dom Q2 to Q4

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8
Q

What is a Quota?

A

A physical limit on the total number of imports.

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9
Q

What is the A - B - C - D of a Quota?

A

Increase Limit
Decrease Supply
Increase Price
Decrease Qd

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10
Q

How is the Quota represented on a trade diagram?

A

Pw + q = Sw + q line above the Pw line but below the origin.
AND a new supply curve shifted to the right labelled S dom + Quota.

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11
Q

What are the imports before quota?

A

Q1 to Q2

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12
Q

What are the imports after quota?

A

Q3 to Q4

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13
Q

What is a domestic subsidy?

A

Payment to domestic producers.

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14
Q

What is A - B - C - D of domestic subsidy?

A

Decrease Costs
Increase Supply
Decrease Price
Increase Qd

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15
Q

How is a domestic subsidy represented on the diagram?

A

Pw increases to Ps to create a new equilibrium with Q3
Which moves Sdom to right to S dom + sub

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16
Q

What are the imports before the subsidy?

A

Q1 to Q2

17
Q

What are the imports after the subsidy?

A

Q1 to Q3

18
Q

Why would a country not want to trade? [6]

A

National Security
Health and Safety.
Anti Dumping
Unfair competition
Environmental Standards
Protecting new industries or struggling industries.

19
Q

What is anti dumping?

A

Because imports are cheaper its could ruin domestic market. Sometimes countries will sell stuff really cheap to dump on other countries because they have too much.

20
Q

What are sunrise industries?

A

New small industries.

21
Q

What are sunset industries?

A

Struggling industries.

22
Q

Why should countries not act on protectionism? (No trade barriers)

A

Fear of retaliation
Increased Costs
Less Choice
Domestic firms have no motivation to become more efficient
Reduced export competitiveness.

23
Q

Explain how a tariff will affect the price and quantity of imports.

A

Tariff increase costs of production
Decreases supply Sw to Sw +t
Increases price Pw to Pw+t
Decrease imports Q1 and Q2 to Q3 and Q4
Consumers move to cheaper alternative

Economics SL IB (11 decks)

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