Chapter+9+***

Listen to the Podcast and follow the graph


 * Adjustments : It is chapter 9. Shinhee was confused with her recent exam chapters.
 * Questions are asked in the podcast.



Summary:

In this chapter we learn about world trade. Domestic price is assumed to be our opportunity cost. If it is below the world price, it means that we have a comparative advantage because we have a lower opportunity cost. Thus, we export. If the world price is below our domestic price, then we import because the world has the comparative advantage. When we import, the domestic consumers are happy because they buy their products at a cheap price, but the domestic producers suffer. Thus, the government charges taxes such as quota and tariff. Quota limits the amount of products imported, and tariff taxes each product consumed. This way, the producers make more surpluses.