Samuel

AP Microeconomics Chapter 9 Quiz Mr. Grochowski H 507 Name: Samuel Yang


 * 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.

As domestic market participates in the world market and the market price is above the domestic price, the surplus wouldn’t occur due to the effect of exports. There will be definite effects on all consumer, producer, and total surplus. In case of consumer surplus, the size of it will decrease and they will be the one who will be worsened by the effect of exports. In case of producer surplus, the size of it will increase and the producers will be the ones who will benefit from the exports. However, the size of total surplus will increase although the size of consumer surplus decreases due to the additional size of the exports. Therefore, if domestic market enters the world market and the market price is above the domestic price, exports will occur and there will be change in consumer, producer, and total surplus.


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

A tariff is a tax on an import; A quota restricts the number of imports. These two factors might be an obstacle to the people who are in the trade market, because they have to pay some parts of their profit to the government again like taxes. The efficiency will go down due to the effect of both tariffs and quotas.

Back -->
 * 1) 3 How what is the differences and similarities between tariffs and quotas?

The primary similarity between tariffs and quotas is that they are both key factors of world-wide trade. A tariff is a tax on an import; A quota restricts the number of imports. In case of difference, tariff revenues result from the government, while gains from import quotas result from importers. Both are protectionist measures which restrict international trade. Tariffs are imposed by the government and their revenues do accrue to the government. Thus, the revenue of tariff definitely does result from the government and gains from import quotas result from imports.