101 chapter 9
DESCRIPTION
International TradeTRANSCRIPT
Microeconomics Chapter 9
!
International Trade
Domestic Price
Domestic Price
the price of a good in the local market
World Price
World Price
the price of a good in the
world market
World Trade
World Trade
always winners and losers
World Trade
World Trade
more winners than losers
World Trade
World Trade
losers can be better
organized
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Demand
Domestic Supply
Export Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Domestic Buyers pay a higher price lose B to Sellers
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Domestic Buyers pay a higher price lose B to Sellers
Domestic Sellers gain D from
world market and gain B from domestic buyers
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Domestic Buyers pay a higher price lose B to Sellers
Domestic Sellers gain D from
world market and gain B from domestic buyers
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Domestic Buyers pay a higher price lose B to Sellers
Domestic Sellers gain D from
world market and gain B from domestic buyers
Export Analysis
Domestic Price
World Price
New Demand Domestic & World
“kink”
Domestic Sales Total Sales
Exports 7 - 3 = 4
Consumers Lose Producers Win
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Domestic Buyers pay a lower price
gain D from world sellers
and gain B from domestic sellers
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Domestic Buyers pay a lower price
gain D from world sellers
and gain B from domestic sellers
Domestic Sellers lose B to Buyers
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Domestic Buyers pay a lower price
gain D from world sellers
and gain B from domestic sellers
Domestic Sellers lose B to Buyers
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
A
B
C
D
Domestic Buyers pay a lower price
gain D from world sellers
and gain B from domestic sellers
Domestic Sellers lose B to Buyers
Import Analysis
Domestic Price
World Price
New Supply Domestic & World
“kink”
Domestic Sales Total Sales
Imports 7 - 3 = 4
Consumers Win Producers Lose
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
World Price
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
World Price
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
World Price
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
World Price
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
World Price
Domestic Price
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
A
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
A
BTariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
A
BC Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
A
BC D Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
A
BC D E Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
A
BC D E F Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
A
BC D E F
G
Tariff of 10
0
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7 8 9 10
Demand
Domestic Supply
Tariff Analysis
Price with Tariff
World Price
Domestic Price
A
BC D E F
G
Tariff of 10
Consumers Lose Producers Win
Government Wins Deadweight Losses
Favor
Favorvariety
lower costs competition
ideas
Oppose
Opposejobs
security infant
fairness
Should you retaliate?
Should you retaliate?
No
Trade is an innovation
Trade is an innovation
don’t need to make it if I can trade for it