Int 7

2. Lecture 7 - Global Economy
ECON 360 International Economics

3. 1. If Canada imposes a tariff on U.S.
dairy products, who is happy and
who is unhappy?

5. Creating Jobs
Creating Prosperity

6. Lots of Jobs
Jobs are a cost not a
benefit

7. We don’t want jobs
We want income

8. Conclusion
Trade creates jobs and
increases wages

9. Exceptions
Yabuts…..
Economic
Noneconomic

10. Possible vs. Plausible
Almost everything
possible never
happens

11. Dumping
Subsidized Industries
Infant Industries
Cultural
National Defense

12. Dumping
Underpricing exports
What’s wrong with
low prices?

13. Dumping
Unfair to producers
Monopoly
Predatory Pricing

14. Unfair to Producers
Do consumers exist to
satisfy producers or do
producers exist to satisfy
consumers?

15. Producers are valuable only
if the satisfy consumers
Otherwise they are
wasting resources

16. Markets are where
value is discovered
Learning and
modifying

17. Markets are
information systems
Profits and losses
direct resources

18. Jobs and businesses
are not ends
They are means of
providing goods and
services

19. The purpose of an
economy is to satisfy
consumers

20. How can one
producer be unfair to
another producer?

21. Maximize incentives
to create value for
consumers.

22. Do low prices hurt
consumers?

23. Argument
Set prices below cost
Drive out competition
Raise prices as a monopoly
No new competition

24. How many firms does it take
for competition to occur?
One, as long as there is
potential for more

25. If you don’t want
competition
Keep prices low

26. Why would prices be lower
in one country over
another?
Demand
Competition
Selling costs

28. How do you bankrupt
efficient producers?
Predator must sell more at a
lower price

29. Japan drives out all American
producers
Korea drives out Japanese
producers

30. Argument
Set prices below cost
Drive out competition
Raise prices monopoly
Were they really below cost?
New competition
Evidence?

31. Who wins a price war?
Consumers

32. Subsidized Industries
Governments are helping
industries

33. New innovation
Who’s happy?
Subsidy
Any difference?

34. 33% of imports are input
goods to make other goods

35. Innovation
or tax subsidy