ECON 101 Lecture Notes - Lecture 9: Ceteris Paribus, Autarky, Market Power
19 Oct 2017
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Econ 101 lecture 9-trade theory (imports/exports: read chapter 9 of textbook. Raises revenue and will not effect demand very much. Trade: small country case- small means you are a price taker, actions as a country cannot affect the price of goods, their behavior does not affect world price, negligible. This is the same with the supply side. P with free market: consumers are helped by this, more apples at a lower price, consumer surplus goes up, where supply meets the p world, this is q supply domestic of free trade. Consumer surplus drops significantly while producer surplus raises: macro of trade is that there is always positive social surplus, winners win and losers lose. Trade restriction : altering trade model to help those who have ben hurt, a trade protection: 1. The social surplus is dead weight loss: restricting trade gives you inefficient production and consumption.
