Topic 1: Microeconomics of Trade Flashcards
In the Demand Curve, the price that consumers face reflects the _______ of consuming a little more.
Marginal Utility
In the Supply Curve, assuming perfect competition, the price facing producers reflects the ______.
Marginal production cost
The Demand Curve is based on:
The consumer’s evaluation of the happiness they get from consuming a good.
The Supply Curve is based on:
a firm’s evaluation of the cost of producing
Consumer surplus is:
When the marginal utility exceeds the price
True or False: A raise in price increases producer surplus and decreases consumer surplus?
True
True or False: When imports are banned, a country can only consume what it produces?
True
What is the MDH curve?
The home import demand curve, and it shows the marginal benefit of imports to Home.
The MDH curve is the difference between the ______ and the _______
Domestic demand curve; domestic supply curve
What is the difference between domestic marginal utility of consumption and domestic marginal cost of production?
The NET GAIN to the nation of producing and consuming one more unit.
What is a MFN Tariff?
A non-discriminating tariff meaning “most favoured nation”
True or False: Have all European nations undertaken substantial MFN Tariff liberalizations?
True
What effect does a Tariff have on domestic price and imports?
It raises the domestic price, and lowers imports
What happens to Home productions when there is a Tariff imposed?
Home production rises since Home firms receive a higher price.
What happens to Home consumption when a Tariff is imposed?
Home consumption falls in response to the higher domestic price.
