Boram

AP Microeconomics Chapter 9 Quiz Mr. Grochowski H 507 Name: Boram Lee


 * 1) 1 Explain the changes in consumer, producer, and total surplus when a domestic market enters the world market and the market price is above the domestic price.

When the world market price is above the domestic price, the markets begin to trade, exporting the items because there are more supplies, compared to demands. When the trade occurs, after-trade-surplus will be larger because after-trade-surplus will include into the producer surplus and thus, the total surplus increases.


 * 1) 2 Using a table and graph show the changes in efficiency that occur when the government imposes a tariff or quota on a good domestically.

Tariff is a tax that is imposed on a imported goods. When the government imposes a tariff on a good, people will demand less than before; thus, the price will approach to the original domestic market price. By imposing a tariff on a good, the government will get a revenue and there will be deadweight loss. Also, they will protect some domestic companies, that sell less number of good, because people like to buy cheaper goods that are from the trade.

Tariff and quotas are similar in a way that are taxes that is imposed on a trade goods. By doing either of tax systems, the government will get revenue and the market price will reach to the equilibrium point closer and closer. However, tariffs are imposed on a imported goods, while quotas are imposed on a exported goods.
 * 1) 3 How what is the differences and similarities between tariffs and quotas?