Microeconomics Lecture on International Trade

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

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

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

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

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

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

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

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

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

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

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

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

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

Microeconomics Lecture on International Trade

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