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Econ452 Learning unit 11 - part 1 - 2021 spring
This document provides an overview of trade policy instruments like tariffs and their economic effects. It begins by outlining the objectives and introduction. It then defines trade policies and instruments like tariffs, quotas, and subsidies. It explains how to analyze the effects of tariffs using partial equilibrium models and consumer/producer surplus concepts. Tariffs reduce consumer surplus but increase producer surplus and government revenue. However, they also create deadweight losses that reduce total welfare. The document compares equilibrium and welfare under autarky, free trade, and a tariff for small and large countries. While a tariff benefits some domestic producers, it reduces total welfare due to higher domestic prices and lower imports/consumption.
