101 lecture 9

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  • 1. Microeconomics Lecture 9 International Trade
  • 2. Domestic Price
  • 3. Domestic Price the price of a good in the local market
  • 4. World Price
  • 5. World Price the price of a good in the world market
  • 6. World Trade
  • 7. World Trade always winners and losers
  • 8. World Trade
  • 9. World Trade more winners than losers
  • 10. World Trade
  • 11. World Trade losers can be better organized
  • 12. Export Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 13. Export Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 14. Export Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 15. Export Analysis 100 Domestic Supply 90 80 World Price 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 16. Export Analysis 100 Domestic Supply 90 80 World Price 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 17. Export Analysis 100 Domestic Supply 90 80 World Price 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 18. Export Analysis 100 Domestic Supply 90 80 World Price 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 19. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 20. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 21. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 22. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 23. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 Total Sales 8 9 10
  • 24. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 Total Sales 8 9 10
  • 25. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 Total Sales 8 9 10
  • 26. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 27. Export Analysis 100 Domestic Supply 90 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 28. Export Analysis 100 Domestic Supply 90 Exports 7-3=4 80 World Price 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 29. Export Analysis 100 Domestic Supply 90 World Price Exports 7-3=4 A 80 70 New Demand Domestic & World “kink” 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 30. Export Analysis 100 Domestic Supply 90 World Price 70 New Demand Domestic & World “kink” B 60 Domestic Price Exports 7-3=4 A 80 50 40 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 31. Export Analysis 100 Domestic Supply 90 World Price Exports 7-3=4 A 80 70 B 60 Domestic Price New Demand Domestic & World “kink” 50 40 C 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 32. Export Analysis 100 Domestic Supply 90 World Price Exports 7-3=4 A 80 70 Domestic Price D B 60 New Demand Domestic & World “kink” 50 40 C 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 33. Export Analysis 100 Domestic Supply 90 World Price Exports 7-3=4 A 80 70 Domestic Price D B 60 New Demand Domestic & World “kink” 50 40 C 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 34. Export Analysis Domestic Buyers pay a higher price lose B to Sellers 100 Domestic Supply 90 World Price Exports 7-3=4 A 80 70 Domestic Price D B 60 New Demand Domestic & World “kink” 50 40 C 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 35. Export Analysis Domestic Buyers pay a higher price lose B to Sellers 100 Domestic Supply 90 World Price Exports 7-3=4 A 80 70 Domestic Price D B 60 New Demand Domestic & World “kink” 50 40 C 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10 Domestic Sellers gain D from world market and gain B from domestic buyers
  • 36. Export Analysis Domestic Buyers pay a higher price lose B to Sellers 100 Domestic Supply 90 World Price Exports 7-3=4 A 80 70 Domestic Price D B 60 New Demand Domestic & World “kink” 50 40 C 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10 Domestic Sellers gain D from world market and gain B from domestic buyers
  • 37. Export Analysis Domestic Buyers pay a higher price lose B to Sellers 100 Domestic Supply 90 World Price Exports 7-3=4 A 80 70 Domestic Price D B 60 New Demand Domestic & World “kink” 50 40 Consumers Lose Producers Win C 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10 Domestic Sellers gain D from world market and gain B from domestic buyers
  • 38. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 39. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 40. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 41. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 42. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 43. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 44. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 45. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 46. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 47. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 48. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 49. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 Total Sales 8 9 10
  • 50. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 Total Sales 8 9 10
  • 51. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 Total Sales 8 9 10
  • 52. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 53. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 54. Import Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 55. Import Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price 50 New Supply Domestic & World “kink” 40 World Price 30 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 56. Import Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price 50 B 40 World Price New Supply Domestic & World “kink” 30 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 57. Import Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price 50 B 40 World Price New Supply Domestic & World “kink” 30 C 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 58. Import Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price 50 B 40 World Price New Supply Domestic & World “kink” D 30 C 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 59. Import Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price 50 B 40 World Price New Supply Domestic & World “kink” D 30 C 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 60. Import Analysis Domestic Buyers pay a lower price gain D from world sellers and gain B from domestic sellers 100 Domestic Supply 90 80 A 70 60 Domestic Price 50 B 40 World Price New Supply Domestic & World “kink” D 30 C 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 61. Import Analysis Domestic Buyers pay a lower price gain D from world sellers and gain B from domestic sellers 100 Domestic Supply 90 80 A 70 Domestic Sellers lose B to Buyers 60 Domestic Price 50 B 40 World Price New Supply Domestic & World “kink” D 30 C 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 62. Import Analysis Domestic Buyers pay a lower price gain D from world sellers and gain B from domestic sellers 100 Domestic Supply 90 80 A 70 Domestic Sellers lose B to Buyers 60 Domestic Price 50 B 40 World Price New Supply Domestic & World “kink” D 30 C 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 63. Import Analysis Domestic Buyers pay a lower price gain D from world sellers and gain B from domestic sellers 100 Domestic Supply 90 Consumers Win Producers Lose 80 A 70 60 Domestic Price 50 B 40 World Price Domestic Sellers lose B to Buyers New Supply Domestic & World “kink” D 30 C 20 Imports 7-3=4 10 0 Demand 0 1 2 3 4 Domestic Sales 5 6 7 Total Sales 8 9 10
  • 64. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 65. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 66. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 67. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 68. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 69. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 70. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 71. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 72. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 73. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 74. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price 50 40 World Price Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 75. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price Price with Tariff World Price 50 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 76. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price Price with Tariff World Price 50 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 77. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price Price with Tariff World Price 50 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 78. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price Price with Tariff World Price 50 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 79. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price Price with Tariff World Price 50 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 80. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price Price with Tariff World Price 50 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 81. Tariff Analysis 100 Domestic Supply 90 80 70 60 Domestic Price Price with Tariff World Price 50 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 82. Tariff Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price Price with Tariff World Price 50 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 83. Tariff Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price Price with Tariff World Price 50 B 40 Tariff of 10 30 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 84. Tariff Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price Price with Tariff World Price 50 B 40 C 30 Tariff of 10 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 85. Tariff Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price Price with Tariff World Price 50 B 40 C 30 D Tariff of 10 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 86. Tariff Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price Price with Tariff World Price 50 40 C 30 D B E Tariff of 10 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 87. Tariff Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price Price with Tariff World Price 50 40 C 30 D B E F Tariff of 10 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 88. Tariff Analysis 100 Domestic Supply 90 80 A 70 60 Domestic Price Price with Tariff World Price 50 40 C 30 D B E F Tariff of 10 G 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 89. Tariff Analysis 100 Domestic Supply 90 Consumers Lose Producers Win Government Wins Deadweight Losses 80 A 70 60 Domestic Price Price with Tariff World Price 50 40 C 30 D B E F Tariff of 10 G 20 10 0 Demand 0 1 2 3 4 5 6 7 8 9 10
  • 90. Favor
  • 91. Favor variety lower costs competition ideas
  • 92. Oppose
  • 93. Oppose jobs security infant fairness
  • 94. Should you retaliate?
  • 95. Should you retaliate? No
  • 96. Trade is an innovation
  • 97. Trade is an innovation don’t need to make it if I can trade for it