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In a quota graph, what does P_Q represent?
The new price after the quota is in place.
In a quota graph, what does Q_Q represent?
The quota limit, the maximum quantity that can be imported.
In a tariff graph, what does P_W represent?
The world price, the price at which goods are traded internationally.
In a tariff graph, what does P_T represent?
The new price after the tariff is imposed.
In a quota graph, what does the orange triangle represent?
Deadweight loss, the loss of total surplus due to the quota.
In a tariff graph, what does the rectangle represent?
Tariff revenue collected by the government.
In a tariff graph, what does Q1 represent?
The quantity produced domestically at the world price.
In a tariff graph, what does Q4 represent?
The total quantity demanded at the world price.
In a quota graph, what does the green triangle represent?
Consumer surplus.
In a quota graph, what does the yellow area represent?
Producer surplus.
Tariff vs. Quota: Impact on government revenue?
Tariffs generate revenue; quotas do not directly.
Tariff vs. Quota: Impact on price?
Both tariffs and quotas lead to higher prices.
Tariff vs. Quota: Implementation?
Tariffs are taxes; quotas are quantity limits.
Consumer Surplus: Free Trade vs. Tariff?
Consumer surplus is higher with free trade.
Producer Surplus: Free Trade vs. Tariff?
Producer surplus is higher with a tariff.
Tariff vs. Quota: Effect on Imports?
Both decrease the quantity of imports.
Tariff vs. Quota: Effect on World Price?
Tariffs have a direct price impact; quotas indirectly affect it.
Deadweight Loss: Tariff vs. Quota?
Both create deadweight loss, reducing overall efficiency.
Free Trade vs. Protectionism: Consumer Choice?
Free trade offers more consumer choice.
Free Trade vs. Protectionism: Domestic Jobs?
Protectionism (tariffs/quotas) aims to protect domestic jobs.
What is international trade?
Countries buying and selling goods/services with each other.
Define public policy.
Laws/regulations governments use to manage the economy.
What is a quota?
A limit on the quantity of a good that can be imported.
Define tariff.
A tax on imported goods.
What is consumer surplus?
The benefit consumers get from buying a good at a lower price than they'd pay.
What is producer surplus?
The benefit producers get from selling a good at a higher price than they'd sell.
Define deadweight loss.
The loss of total surplus due to inefficiency.
What is world price?
The price at which goods are traded internationally.
Define tariff revenue.
Tax revenue collected by the government from tariffs.
What is market equilibrium?
The point where supply and demand meet naturally.