2 Essential QuestionHow do trade barriers keep voluntary trade from occurring between countries?
3 Candy SaleWho wants some candy??Raise your hands
4 How Much? Today, I’m running a special. I paid about 5 cents a piece. But I have to charge you a tax.I’ll sell it for $1 dollar a piece.Who still wants some?Why not?
5 How Many?Okay, I’ll sell it for 5 cents a piece. (you can owe it to me if you don’t have the money)Who wants some now?Okay, oops, I forgot to tell you, I can only sell 5 pieces. After 5 pieces, I can’t sell anymore.I’m only allowed to sell 5 pieces
6 To Who? Okay, who still wants some? I’ll sell candy to everyone whose last name begins with C.If your last name doesn’t begin with “C” then I refuse to sell you candy.Sorry!
7 Trade BarriersTrade Barriers keep products from being bought and sold between countries.There are 3 major types of trade barriersTariffsQuotasEmbargoesThey “hinder” (stop, or slow down) global trade.
8 TariffsTariffs are taxes charged for goods that leave or enter a countryIn order to get a product from another country, you have to pay extra for it.Just like sales taxThink of how many goods the United States imports. How do you think tariffs might affect the economy?How do you think this affects world trade?
9 QuotasA quota is when a country limits the amount of a product that can be sold to another country.EX: A country might limit the amount of sugar sold to other countries to 50 tons per year.What happens when a country has already bought their entire quota?How do you think this affects world trade?
10 EmbargoesAn embargo is when one country completely refuses to trade with another country.EX: We used to have an embargo with the Soviet UnionEX: We now have an embargo with CubaThis is usually done between two countries that don’t like each other.How do you think this affects world trade?
12 What is Your Product? You and your partner create a product. It can be anything, name it and draw a picture of it.Would you want to sell this product in other countries? Why?Why wouldn’t you want quotas when selling this product?Why wouldn’t you want tariffs when selling this product?Why wouldn’t you want an embargo when selling this product?Why might you want embargoes when selling this product?