ECO100Y5 Chapter Notes - Chapter 33-34: Import Quota, Comparative Advantage, Opportunity Cost
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ECO100Y5 Full Course Notes
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The gains from trade arise when nations export goods in which they have a comparative advantage. Losses to consumers for these exported goods are smaller than the gains to producers. Losses to domestic producers in the import sector will be smaller than gains to consumers. Economic ef ciency is increased by free trade. (fig. People who argue that free trade makes nations dependent, that specialization is risky, or that specialization can be boring are arguing from a political position. The sum of gains to domestic producers and revenues collected by governments will always be smaller than losses accruing to consumers. Import quotas are quantity restrictions on imported goods. The sum of gains to domestic producers and rent collected by licensed imported will always be smaller than losses accruing to consumers. Demand and supply for an imported phone are given by d = 1800 10p and s = 10p 600. The world price for this phone is only 80 dollars.
