Jenice



AP Microeconomics Chapter 9 Quiz Mr. Grochowski H 507 Name: Jenice Lee When a domestic market enters the world market and the market price is above the domestic price, the consumer surplus increases, while the producer surplus decreases. The change in total surplus increases because of the imported goods. Without entering the world market, the domestic market has the same shape of surplus with the consumer surplus on top and the producer surplus on the bottom. However, when the price moves down to the world price, consumer surplus increases by the amount the price decreased. On the other hand the producer surplus decreases by the amount the price decreased. The consumers also get surplus from the imported good, which makes the total surplus to increase. When the government imposes tariff or quota on a good domestically, the consumer surplus decreases by the amount of tariff or quota and the producer surplus increase by the the amount of tariff or quota except the dead weight losses and the government revenue. Therefore, the tariff raises the quantity supplied because producers get more money, and the tariff also reduces the consumption of the good, since the price is higher, thus decreases the quantity demanded. The similarities between tariffs and quotas is that they are both some kind of restrictions on international trade. However, tariff is the tax that is imposed on imports or exports, when quotas is the limited amount that can be imported or exported.
 * 1) 1Explain 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?