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AP Microeconomics Chapter 9 Quiz Mr. Grochowski H 507 Name: Jae Ho Jung When the domestic market enters the world market and the market price is above the domestic price, the domestic market will be the exporter. When this happens, the consumer surplus will decrease. However, the Producer surplus will increase, and this will outweigh the lose. Thus, the total surplus will increase Tariff or quotas are limits set by the governments to protect their domestic producers. When this happens, the producer would be better off, and the government would raise more revenue. However, the lose of the consumers outweigh all the benefits combine, making tariffs and quotas a inefficient plan. Tariffs are taxes placed upon the imported goods by the government to protect the domestic producers. Quotas are limits set by the government on number of items that could be imported in order to protect the domestic producers. Both are similar because they are both government actions designed to protect the domestic market from the world market. However, these are different because while tariffs reaches its goal by making the price of the imported goods go up, quotas just set limits on the number of items that can be imported.
 * 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.
 * 1) 2 Explain show the changes in efficiency that occur when the government imposes a tariff or quota on a good domestically.
 * 1) 3 How what is the differences and similarities between tariffs and quotas?