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.
How do quotas affect prices?
Quotas lead to higher prices for consumers.
How do tariffs protect domestic industries?
Tariffs make foreign products more expensive, giving domestic firms a price advantage.
What is the impact of a quota on market efficiency?
Quotas reduce overall market efficiency by creating deadweight loss.
How does free trade affect consumers?
Consumers benefit from lower prices and a greater quantity of goods.
How do tariffs affect domestic producers?
Domestic producers benefit from tariffs because they can sell at a higher price.
How does a tariff affect the quantity of imports?
A tariff decreases the quantity of imports.
How does a quota affect the supply curve?
A quota makes the supply curve perfectly inelastic at the quota quantity.
How does free trade impact domestic producer surplus?
Free trade usually decreases domestic producer surplus.
How does a tariff impact consumer surplus?
A tariff decreases consumer surplus due to higher prices.
How does a quota affect the quantity of imports?
A quota limits the quantity of imports to a specific amount.
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.