Dongju


 * 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 shown by the table, though consumer surplus decreases, the benefits gained by the producers through international trade outweighs those costs.
 * || Before International Trade || After International Trade ||
 * Consumer Surplus || A B C (3 spaces) || A (1 space) ||
 * Producer Surplus || D E (2 spaces) || B C D E F (5 spaces) ||
 * Total Surplus || ABCDE || ABCDEF ||
 * F= exports


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

Having a tarriff means that the world price is lower than the domestic price. Consumer surplus decreases between 'no trade' and 'international trade. producer surplus increases between 'no trade' and 'international trade'. Consumer surplus increase between 'intl. trade' and 'tariff trade' but this amount is still more than CS at 'no trade'. Producer surplus increases between 'intl. trade' and 'tariff trade', but the amount of PS is still less than the original PS at 'no trade;.

Because of the differences in resulting PS and CS at 'tariff trade' there is DWL. This DWL means that some resources are being lost, meainng there is less efficiency.


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

the diff between tariff and quotas is: - quotas are a limit on the amount that can be imported, tariffs are a tax on the goods imported. - both are similar because they have the effect of making imports more expensive, and encouraging domestic markets.