Download Chapter 9 - Cengage Learning

Application:
International Trade
Copyright © 2011 Cengage Learning
9
Figure 1 The Equilibrium without International Trade
Price
of olive oil
Domestic
supply
Consumer
surplus
Equilibrium
price
Producer
surplus
Domestic
demand
0
Equilibrium
quantity
Quantity
of olive oil
Copyright © 2011 Cengage Learning
Figure 2 International Trade in an Exporting Country
Price
of olive oil
Domestic
supply
Price
after
trade
World
price
Price
before
trade
Exports
0
Domestic
quantity
demanded
Domestic
demand
Domestic
quantity
supplied
Quantity
of olive oil
Copyright © 2011 Cengage Learning
Figure 3 How Free Trade Affects Welfare in an Exporting
Country (1)
Price
of olive oil
Consumer surplus
before trade
Price
after
trade
Exports
A
B
Price
before
trade
World
price
D
C
Producer surplus
before trade
0
Domestic
supply
Domestic
demand
Quantity
of olive oil
Copyright © 2011 Cengage Learning
Figure 3 How Free Trade Affects Welfare in an
Exporting Country (2)
Copyright © 2011
Cengage
Learning
Copyright
© 2010
Cengage Learning
Figure 4 International Trade in an Importing Country
Price
of olive oil
Domestic
supply
Price
before
trade
Price
after
trade
World
price
Imports
0
Domestic
quantity
supplied
Domestic
quantity
demanded
Domestic
demand
Quantity
of olive oil
Copyright © 2011 Cengage Learning
Figure 5 How Free Trade Affects Welfare in an Importing
Country (1)
Price
of olive oil
Consumer surplus
after trade
Domestic
supply
A
Price
before trade
Price
after trade
0
B
C
D
Imports
Producer surplus
after trade
World
price
Domestic
demand
Quantity
of olive oil
Copyright © 2011 Cengage Learning
Figure 5 How Free Trade Affects Welfare in an
Importing Country (2)
Copyright © 2011
Cengage
Learning
Copyright
© 2010
Cengage Learning
Figure 6 The Effects of a Tariff (1)
Price
of olive oil
Domestic
supply
Equilibrium
without trade
Price
with tariff
Tariff
Price
without tariff
0
Imports
with tariff
S
Q
S
Domestic
demand
D
Q
Q
Imports
without tariff
D
Q
World
price
Quantity
of olive oil
Copyright © 2011 Cengage Learning
Figure 6 The Effects of a Tariff (2)
Copyright © 2011
Cengage
Learning
Copyright
© 2010
Cengage Learning
Figure 7 The Effects of an Import Quota (1)
Price
of olive oil
Domestic
supply
Equilibrium
without trade
Quota
A
Isolandian
price with
quota
Price
World
without =
price G
quota
0
B
C
E'
D
Equilibrium
with quota
F
E"
Imports
with quota
S
Q
Domestic
supply
+
Import supply
S
Domestic
demand
D
Q
Q
Imports
without quota
D
Q
World
price
Quantity
of olive oil
Copyright © 2011 Cengage Learning
Figure 7 The Effects of an Import Quota (2)
Copyright © 2011
Cengage
Learning
Copyright
© 2010
Cengage Learning