Application International trade Chapter g
Application: International Trade Chapter 9
International Trade What determines whether a country imports or exports a good? Who gains and who loses from free trade among countries What are the arguments that people used to advocate trade restrictions
International Trade • What determines whether a country imports or exports a good? • Who gains and who loses from free trade among countries? • What are the arguments that people used to advocate trade restrictions?
Equilibrium without trade assume A country is isolated from rest of the world and process steel o The market for steel consists of the buyers and sellers in the country. o no one in the country is allowed to import or export steel
Equilibrium without Trade Assume: • A country is isolated from rest of the world and process steel. • The market for steel consists of the buyers and sellers in the country. • No one in the country is allowed to import or export steel
Equilibrium without trade C of steel Domestic supply Consumer surplus equilibriun… Price Producer sur Domestic demand Equilibrium Quantity quantity of steel
Equilibrium without Trade Price of Steel Equilibrium Price 0 Quantity of Steel Equilibrium quantity Domestic supply Domestic demand Producer surplus Consumer surplus
Equilibrium without trade Results Domestic price adjusts to balance demand and supply o The sum of consumer and producer surplus measures the total benefits that buvers and sellers receive
Equilibrium without Trade Results: • Domestic price adjusts to balance demand and supply. • The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive