1. International Economics (751401)
Session 2
21/06/54
The Basic Theory Using Demand and Supply
Aj.Noom Tel

2. International Economics Is Different
Four Events
1) International Outsourcing
2) Poor Worker in Poor Countries
3) The Trade Union Countries
4) The Rising of Sovereign Wealth Funds

3. Key Questions About International Trade
Why do countries trade? More precisely, what determines which products a country export and which products it import ?
How does trade effect production and consumption in each country ?
Which country gain from trade ?
Which in each country, who are the gainers and losers from opening trade ?

4. Trade Usually Results from The Interaction of Competitive Demand and Supply.
What are the factors influencing the demand ?
Supply
What are the factors influencing the supply ?
Supply
Demand
What will happen if the demand and supply are unmatched ?

5. Demand and Supply for Motorbikes
Consumer Surplus
Producer Surplus
Consumer Surplus
Producer Surplus

6. The Market for Motorbikes: Demand and Supply
No-trade Equilibrium
Consumer Surplus
Producer Surplus

7. The Effects of Trade on Production, Consumption, and Price, Shown with Demand and Supply Curves
World Price with Trade
Pre-trade Price Dx
Exports Sx Sf
World Price with Trade Df
Imports
Pre-trade Price

8. The Effects of Trade on Production, Consumption, and Price, Shown with Demand and Supply Curve

9. The Effects of Trade on Well-Being of Producers, Consumers, and the Nation as a Whole
Which one better ?

10. Key Concerned Issue Regarding Net Nation Gain
One dollar, one vote
The Welfare Effects

11. Which Country Gain More ?
Consumer Surplus Dx Sx
Sx = Represent Exporting Country
Producer Surplus
Dx = Represent Importing Country

12. Price Change (percent)
Country
Pre-trade Price
Free Trade Price
Price Change (percent)
U.S.
(Importer)
2,000
1,000
100%
The Rest of the World (Exporter)
700
30%
Gain More

13. Importing Country (U.S.) Exporting Country (The Rest of the Word)
Take Some Advantages
Consumers
What if they are rich ?
Take Some Disadvantages
Producers
What if they are poor ?
Exporting Country (The Rest of the Word)
Take Some Disadvantages
Consumers
What if they are poor ?
Take Some Advantages
Producers
What if they are rich ?