Helen


 * 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.

When the world market price is above the domestic price, then the domestic country decides to export because the producers can sell their products at a higher price (world price), thus have more profit for the producers. Export is is a benefit to the producers, but it hurts the consumers. However, the overall total surplus increases because the country is receiving income that they could not have without exporting.


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

When the government imposes a tariff, then it reduces the efficiency in the market because tariff is a type of tax. When the prices of products become higher, the quantity demanded decreases while the quantity supplied increases, making the new curve move closer to the equilibrium price. Thus, it creates a deadweight loss in the market, hindering efficiency in economics.

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

Tariffs and quotas are both regulations made by the government, thus they both regulate the "invisible hand" theory. Tariffs and quotas hinder efficiency in economics, because they create deadweight loss. Tariffs are taxes imposed on imported goods.