module 5 Flashcards
1
Q
effects of taxes
A
- increase price consumers pay
- decrease amount of money sellers receive
- decrease the quantity bought and sold
2
Q
unit taxes
A
taxes characterized by a fixed dollar amount
3
Q
deadweight loss
A
decrease in total surplus due to tax – hinders the mutually beneficial transaction between consumer and sellers
4
Q
relationship between elasticity and DWL
A
the more inelastic, the less deadweight loss
5
Q
comparative advantage
A
if they can produce at a lower opportunity cost
6
Q
domestic price
A
price buyers pay and price sellers would receive if country didn’t use world trade for that product
7
Q
world price
A
price at which a good is exchanged in international trade
8
Q
tariffs
A
tax applied to specific imports
9
Q
import quota
A
limit on quantity of that good can be imported
10
Q
benefits of trade
A
- variety
- trade lets companies into larger markets
- lower prices
- flow of ideas
- encourages world peace
11
Q
A
