Sarah

Chapter 9 Quiz
 * AP Microeconomics


 * 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.**

The changes when a domestic market enters the world market, that country is exporting the resources or goods. The consumer surplus decreases, the producer surplus increases and the total surplus increases. This is because when the world price is above the domestic price, the producers will increase the price, and receive more surplus than the consumers. The trade income will be given to the producers, thus the surplus would definitely increase. Unfortunately, the consumer's surplus would decrease since the price is at a higher level, the amount the goods are sold at is at a higher price. In addition to the producer surplus, the total surplus increases because when the world price is higher than the domestic price, there is a gap just like the surplus line. And the triangle in the middle is the additional income.


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

When a government imposes a tariff or a quota on a good domestically, then the amount sold would decrease in the country because people would think that the price has risen, and thus, not wanting to spend so much money on it. There are dead weight loss if the government impose a tariff or quota on a good because part of the money will be lost because none of the consumers nor producers will receive them. Overall, the changes are that producer surplus would decrease, however, world-wide, the good would be selling at a good amount and making profit when exporting.


 * 3 What is the differences and similarities between tariffs and quotas?**

The definition of tariffs and quotas are that tariffs are taxes that are imposed on the resource, and quota is the limited amount of goods that are sold in the market. The similarities are that it both limits the amount of resource the consumers are willing to buy, and as well as the producers being unable to make as much profit as they would before. The differences of the two is that tariff is to make income to the government and as well as benefiting the consumers and producers in both ways. However, the quota is just limiting the amount of resources in the market due to the lack of resources and payments. none Looking for tags?|| Cancel || Tagging pages is now done in a new place. Once you have saved your changes, click on the "Page" tab and select "Details and Tags". || ||   ||
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