ECON 200 Lecture Notes - Lecture 22: Autarky
24 Nov 2015
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Document Summary
Autarky: economy that is self-contained and does not engage in trade with outsiders. National characteristics affecting the cost of producing goods: natural resources and climate, factor endowment, technology. Big vs. small economic countries: only countries with big economies affect world prices. Restrictions on trade: laws, world trade policies: trade protection: protectionism is a preference for policies that limit trade, trade liberalization: getting rid of tariffs and quotas. Tariff: tax on imported goods: leads to deadweight loss it is inefficient, protects the interests of domestic producers o price plus the tariff. The new world price is the old world. Quota (imports): limit on the amount of a particular good that can be imported. In a market where a country has a comparative advantage: world price would be higher than domestic price. In a market where a country has a comparative advantage and has just switched from an autarky to free trade: producers would benefit, and consumers would lose.
