Set 1

In the US ____ gain from trade

buyers
In Ecuador, ____ gain from trade

sellers
As a whole, does the United States or Ecuador benefit from trade?

Both countries benefit from trade.
With an import tariff _____ domestic production from

increase q1 to q2
Domestic consumption ___ from

decrease from q3 to q4
Intuitively, why is A part of the deadweight loss from this tariff?

The incremental cost of domestically producing the additional output increases by area A.
Intuitively, why is B part of the deadweight loss from this tariff?

Consumers purchase fewer units of the good and lose surplus of area B as a result.
When the tariff is eliminated, the quantity supplied by domestic producers

decreases
When the tariff is eliminated, the quantity demanded by domestic consumers

increases
When the tariff is eliminated, what is the impact on domestic producers, foreign producers, and domestic consumers?

Foreign producers and domestic consumers win. Domestic producers lose.
Which of the following is not an externality?

Jordan has lung cancer from smoking cigarettes.

Author

dwrght16

330201

Card Set

Set 1

Description

exam 3

Updated

2017-04-07T22:51:49Z

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