The effects of a tariff (numerical example) Nikola Spustová Monika Tibenská.

Slides:



Advertisements
Similar presentations
Copyright © 2006 Thomson Learning 9 Application: International Trade.
Advertisements

Trade Policy (Tariffs, Subsidies, VERs)
International Economics
LECTURE #8: MICROECONOMICS CHAPTER 9
Policies to correct balance of payments disequilibrium
Slides prepared by Thomas Bishop, edited by Mishelle Segui Copyright © 2009 Pearson Addison-Wesley. All rights reserved. Chapter 8 The Instruments of Trade.
Chapter 4: Essential Microeconomic Tools Everything should be made as simple as possible, but not simpler. Albert Einstein.
Chapter Sixteen Equilibrium. Market Equilibrium  A market is in equilibrium when total quantity demanded by buyers equals total quantity supplied by.
Chapter 16 Equilibrium.
Let´s talk something about subsidies... Subsidy is a payment to a firm or individual that ships a good abroad. The effects of an export subsidy on prices.
CHAPTER 7 ANALYSIS OF A TARIFF.
Pf Pt Price Quantity Supply (Domestic) Demand (Domestic)
McGraw-Hill/Irwin © 2012 The McGraw-Hill Companies, All Rights Reserved Chapter 8: Analysis of a Tariff.
Chapter 9 International Trade
Tariffs, quota's, and other trade restrictions
INTERNATIONAL ECONOMICS: THEORY, APPLICATION, AND POLICY;  Charles van Marrewijk, 2012; 1 Tariff, partial equilibrium Countries may restrict trade in.
3 SUPPLY AND DEMAND II: MARKETS AND WELFARE. Copyright © 2004 South-Western 7 Consumers, Producers, and the Efficiency of Markets.
Goods Prices and Factor Prices: The Distributional Consequences of International Trade Nothing is accomplished until someone sells something. (popular.
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. International Trade What determines whether a country imports or exports a good?
Copyright©2004 South-Western 9 Application: International Trade Application: International Trade.
Nations and firms in the global economy; Cambridge University Press, 2006© Charles van Marrewijk, 2005; 1 Tariff, partial equilibrium; 1 Countries may.
Economic surplus Gains and losses with international trade: Economic Welfare.
International Trade. U.S Trade Information exports: 1.0 trillion dollars 9.7 % of GDP imports: 1.4 trillion dollars 13.7 % of GDP Source:
Chapter Five: Welfare Analysis. Consumer Surplus.
Calculating Protectionism (HL)
Copyright © 2011 Cengage Learning 9 Application: International Trade.
Instruments of Trade Policy
Slide 8-1  Effects of a Tariff Assume that two large countries trade with each other. Suppose Home imposes a tax of $2 on every bushel of wheat imported.
Trade and welfareslide 1 S D Q P Q* P* = $1 The diagram below shows the U.S. domestic market for water. No trade is taking place. WATER MARKET.
Session 8 Analysis of a Tariff. Tariff Tariff is a tax on importing a good or service into a country, usually collected by customs official at a place.
Class 20 April 5 Last class: Midterm exam Today: 4. Trade policies of importing nations Next class: Result of the midterm exam 4. Trade policies of importing.
Copyright © 2003 Pearson Education, Inc.Slide 5-1  Effects of an Export Subsidy Example: Suppose that Home offers 20% subsidy on the value of cloth exported:
Figure 8.2 The Gains from Free Trade at Home Feenstra and Taylor: International Economics, First Edition Copyright © 2008 by Worth Publishers.
1 An Introduction to International Economics Second Edition Trade Restrictions: Tariffs Dominick Salvatore John Wiley & Sons, Inc. CHAPTER F I V E.
A.S 3.2 International Trade. Involves buying and selling goods and services between nations Most trade occurs between firms operating in different countries.
Copyright © 2012 Pearson Addison-Wesley. All rights reserved. Chapter 9 The Instruments of Trade Policy.
9 Application: International Trade. The World Price and Comparative Advantage The effects of free trade can be shown by comparing the _________ price.
Economic Analysis for Business Session X: Consumer Surplus, Producer Surplus and Market Efficiency-2 Instructor Sandeep Basnyat
Application: International Trade
Chapter 8 The Instruments of Trade Policy. Slide 8-2Copyright © 2003 Pearson Education, Inc. 1. Introduction  This chapter is focused on the following.
 Charles van Marrewijk Tariff, partial equilibrium; 1 Countries may restrict trade in several ways. For example, they may Impose a 100 Euro tax per imported.
International Monetary Systems
Restrictions on free trade
International Trade.
Last class: Today: Next class: Reading:
PubPol/Econ 541 Tariff Analysis Partial Equilibrium by Alan V. Deardorff University of Michigan 2016.
The Impact of Trade Protection
Restrictions on free trade
Chapter 7: The Basic Analysis of a Tariff
Chapter Sixteen Equilibrium.
International trade in an importing country
International Monetary Systems
International Economics Analysis of a Tariff
EXPORT SUBSIDIES IN AGRICULTURE AND HIGH-TECHNOLOGY INDUSTRIES
Introduction: Instruments of Trade Policy (Chapter 8)
Benefits and Issues of International Trade
Application: International Trade
The Effects of Free International Trade on Welfare
Supply Unit 2: Supply and Demand.
Price Supply (Domestic) Pt Pf Demand (Domestic) Quantity.
Chapter 8: Trade Restrictions: Tariffs
International Trade Economics 101.
International Trade Chapter 8
Chapter 4: Essential Microeconomic Tools Everything should be made as simple as possible, but not simpler. Albert Einstein.
The Effects of a Tariff... Tariffs are taxes on imported goods.
Copyright eStudy.us 2010 Application: International Trade What determines whether a country imports or exports a good? Who gains.
International Trade Economics 101.
Supply Unit 2: Supply and Demand.
Market Equilibrium – Consumer and Producer Surplus Graphically, we can identify the areas representing consumer and producer surplus, which.
International Trade and Tariff
Presentation transcript:

The effects of a tariff (numerical example) Nikola Spustová Monika Tibenská

A tariff: raises the price of a good in the importing country lowers it in the exporting country Consumers: lose in the importing country gain in the exporting country Producers: gain in the importing country lose in the exporting country

Trade in COTTON Trade in COTTON Home country: D=150-30P S=30+10P Foreign country: D*=100-40P* S*=20+40P*

Problem 1 Derive and graph Home’s import demand schedule. What would the price of cotton be in the absence of trade?

Problem 2 Derive and graph Foreign’s export supply curve What price of cotton that would prevail in Foreign in the absence of trade? Suppose that Foreign and Home trade with each other, at zero transportation cost. Find and graph the equilibrium under free trade. What is the world price and the volume of trade?

Problem 3 Home imposes a specific tariff of 0.5 on cotton imports. Determine and graph the effects of the tariff on the following: a) the price of cotton in each country b) the quantity of cotton supplied and demanded in each country c) the volume of trade.

Problem 4 Show graphically and calculate: a) the terms of trade gain b) the efficiency loss c) the total effect on welfare of the tariff.

Thank you for attention!