Presentation is loading. Please wait.

Presentation is loading. Please wait.

Copyright © 2011 Cengage Learning 9 Application: International Trade.

Similar presentations


Presentation on theme: "Copyright © 2011 Cengage Learning 9 Application: International Trade."— Presentation transcript:

1 Copyright © 2011 Cengage Learning 9 Application: International Trade

2 Figure 1 The Equilibrium without International Trade Consumer surplus Producer surplus Price of olive oil 0 Quantity of olive oil Domestic supply Domestic demand Equilibrium price Equilibrium quantity Copyright © 2011 Cengage Learning

3 Figure 2 International Trade in an Exporting Country Price of olive oil 0 Quantity of olive oil Domestic supply Price after trade World price Domestic demand Exports Price before trade Domestic quantity demanded Domestic quantity supplied Copyright © 2011 Cengage Learning

4 Figure 3 How Free Trade Affects Welfare in an Exporting Country (1) D C B A Price of olive oil 0Quantity of olive oil Domestic supply Price after trade World price Domestic demand Exports Price before trade Producer surplus before trade Consumer surplus before trade Copyright © 2011 Cengage Learning

5 Copyright © 2010 Cengage Learning Figure 3 How Free Trade Affects Welfare in an Exporting Country (2) Copyright © 2011 Cengage Learning

6 Figure 4 International Trade in an Importing Country Price of olive oil 0 Quantity Price after trade World price of olive oil Domestic supply Domestic demand Imports Domestic quantity supplied Domestic quantity demanded Price before trade Copyright © 2011 Cengage Learning

7 Figure 5 How Free Trade Affects Welfare in an Importing Country (1) C B D A Price of olive oil 0 Quantity of olive oil Domestic supply Domestic demand Price after trade World price Imports Price before trade Producer surplus after trade Consumer surplus after trade Copyright © 2011 Cengage Learning

8 Copyright © 2010 Cengage Learning Figure 5 How Free Trade Affects Welfare in an Importing Country (2) Copyright © 2011 Cengage Learning

9 Figure 6 The Effects of a Tariff (1) Price of olive oil 0 Quantity of olive oil Domestic supply Domestic demand Price with tariff Tariff Imports without tariff Equilibrium without trade Price without tariff World price Imports with tariff Q S Q S Q D Q D Copyright © 2011 Cengage Learning

10 Copyright © 2010 Cengage Learning Figure 6 The Effects of a Tariff (2) Copyright © 2011 Cengage Learning

11 Figure 7 The Effects of an Import Quota (1) A E' C B G D E" F Price of olive oil 0 Quantity of olive oil Domestic supply Domestic supply + Import supply Domestic demand Isolandian price with quota Imports without quota Equilibrium with quota Equilibrium without trade Quota Imports with quota Q D World price World price Price without quota = Q S Q D Q S Copyright © 2011 Cengage Learning

12 Copyright © 2010 Cengage Learning Figure 7 The Effects of an Import Quota (2) Copyright © 2011 Cengage Learning


Download ppt "Copyright © 2011 Cengage Learning 9 Application: International Trade."

Similar presentations


Ads by Google