Midterm 2 (International Trade) Flashcards
International trade increases wealth by ________-______ alternatives, increased diversity of ________, and access to ___________.
lower-cost
choices
resources
Mutually beneficial terms of trade:
between both opportunity costs
Trade helps countries consume well beyond their _____
PPF
Q purchased by domestic consumers + Q purchased by foreign consumers = ________ _________ ________
domestic quantity supplied
Q supplied by domestic producers + Q supplied by foreign producers = _________ _________ ________
domestic quantity demanded
International trade greatly increases producer surplus when world price is _________ than domestic price.
higher
welfare effects of imports or exports?
-CS falls
-PS rises
-society is better off
exports
producers might oppose international trade if the Pw is _______ than domestic price because…
lower
they are losing so much to foreign competition
reduced price and output means…
fewer jobs in the industry
Why is society always better off with international trade?
because of the net gain
tariffs reduce _______ and make domestic prices _________, but the overall quantity of product being purchased domestically has ________ due to the price change.
imports
higher
fallen
welfare effects of imports or exports?
-CS rises
-PS falls
-society is better off
imports
what is a quota?
numerical limit of a good that can be imported
purpose of a quota
to protect or encourage growth of a specific industry (reduction in imports)
welfare effects of tariff or quota?
-CS falls
-PS rises
-govt collects $
-society is worse off
tariffs
