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Figure 19-1: Production possibility frontier U.S. production and consumption in autarky 1,000 (b) Colombian Production Possibility Frontier Quantity of computers 2,000 Cus Slope = -2 2,000 1,000 Colombian production and consumption in autarky 500 CCO PPFus 0 500 Slope = -0.5 PPFCO 0 1,000 1,000 2,000 Quantity of roses (boxes) Quantity of roses (boxes) (c) Joint Production Possibility Frontier Quantity of computers Quantity of computers (a) U.S. Production Possibility Frontier 3000 Slope = .5 2000 Slope = -2 0 2000 3000 Quantity of roses (boxes) Images by MIT OpenCourseWare. Figure 19-2: Gains from trade 2,000 QUS U.S. production with trade U.S. consumption with trade C'US 1,250 1,000 CUS U.S. production and consumption in autarky 0 (b) Colombian Production and Consumption PPFUS 500 750 1,000 Quantity of roses (boxes) Quantity of computers Quantity of computers (a) U.S. Production and Consumption Colombian production and consumption in autarky Colombian consumption with trade 1,000 PPFCO C'CO 750 500 0 Colombian production with trade CCO QCO 1,0001,250 2,000 Quantity of roses (boxes) Images by MIT OpenCourseWare. Figure 19-3: Producer and consumer surplus in autarchy Price of roses (per box) Domestic supply Consumer surplus PA A Producer surplus Domestic demand QA Quantity of roses (boxes) Image by MIT OpenCourseWare. Figure 19-4: Rose market with imports Price of roses (per box) Domestic supply World supply Autarky price A PA PW World price Domestic demand QT QA Domestic quantity supplied with trade Imports CT Domestic quantity demanded with trade Quantity of roses (boxes) Image by MIT OpenCourseWare. Figure 19-5: The impact of imports on consumer and producer surplus Price of roses (per box) Domestic supply W World supply A PA X Changes in surplus Z Gain PW Domestic demand Consumer surplus QT QA X+Z -X Producer surplus Change in total surplus Loss +Z CT Imports Quantity of roses (boxes) Image by MIT OpenCourseWare. Figure 19-6: World price and exports World supply Price of computer Domestic supply World price PW A PA Autarky price Domestic demand CT Domestic quantity demanded with trade QA QT Domestic quantity supplied with trade Exports Quantity of computers Image by MIT OpenCourseWare. Figure 19-7: The impact of exports on consumer and producer surplus Price of computer World supply W PW Domestic supply Z X PA Changes in surplus A Y Gain -X Consumer surplus Domestic Demand CT QA Producer surplus Change in total surplus Loss X+Z +Z QT Exports Quantity of computers Image by MIT OpenCourseWare. Figure 19-8: Tariff Price of roses (per box) Domestic supply World supply Price with tariff PT Tariff PW World price Domestic demand Q1 Q2 C2 C1 Quantity of roses (boxes) Imports after tariff Imports before tariff Image by MIT OpenCourseWare. Figure 19-9: Impact of tariff on surplus Price of roses (per box) Domestic supply Changes in surplus World supply PT C B D PW Domestic demand Q1 Q2 C2 Quantity of roses (boxes) Producer surplus A Government revenue C Change in total surplus Loss -(A+B+C+D) Consumer surplus A Tariff Gain -(B+D) C1 Image by MIT OpenCourseWare. MIT OpenCourseWare http://ocw.mit.edu 14.01SC Principles of Microeconomics Fall 2011 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.
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