All Flashcards
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.
What are the pros of tariffs?
Protect domestic industries, raise revenue.
What are the cons of tariffs?
Higher prices for consumers, deadweight loss.
Who benefits from quotas?
Domestic producers.
Who loses from quotas?
Consumers.
What is the impact of tariffs on imports?
Tariffs decrease imports.
What is the impact of quotas on domestic production?
Quotas increase domestic production.
What is the impact of tariffs on government revenue?
Tariffs generate revenue for the government.
What is the impact of quotas on prices?
Quotas lead to higher prices.
What is the impact of tariffs on consumer surplus?
Tariffs reduce consumer surplus.
What is the impact of quotas on deadweight loss?
Quotas create deadweight loss.
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.