Ed

AP Microeconomics Chapter 9 Quiz Mr. Grochowski H 507 Name:Edward Cho


 * 1) 1 Draw a graph and table showing 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 domestic market enters the world market and the market price is above the domestic price, the consumers are worse off when the producers are well off. Since the Market price is higher than the domestic price, the consumers have to buy the products at higher prices than before, and the producers will be able to sell stuff at higher prices than before. Consumer surplus will decrease whereas producer surplus will increase. Therefore the total surplus will not change too much as one side is benefiting while the other side is not. It is not a situation where both sides of consumers and producers benefit. Producers benefit while consumers don't therefore the total surplus does not change too much. (Doesn't change.... but maybe there are exceptions)


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

Tariffs are putting tax on imported goods in order to give fair competition to the domestic goods. Without Tariffs, the imported goods will be so much cheaper that the domestic good producers will not survive. By putting tariffs on imported goods, the government is giving advantage to the domestic goods for fair competition. As the price of the imported goods go up, their quantity demand comparatively decreases to the same level with the domestic goods with similar price. Quota is also supporting the domestic goods in a way but is a slight different than Tariffs. Quota is simply limiting the number of products imported and exported. By limiting the number of goods imported and exported, the government can prevent the foreign goods from dominating the domestic market. This is also a way to give advantages to the domestic producers. As international trade comes in, producers are well off but consumers are worse off since the supply will stay the same with more demand increasing the price. However, by limiting the amount that can be exported, the government is helping the consumers to get domestic goods at low prices.

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

Tariffs are the tax put on the imported goods to help the domestic producers. However, quotas doesn't directly affect the price of the good. Instead, it limits the number of goods imported and exported. The effects are quite similar. It doesn't directly affect the price of the good, but in the long run it is actually affecting price of the good. The similarities between tariffs and quotas is that these two are both designed to support the consumers and producers from domestic market. It is a government's way to prevent the foreign goods from getting too much power in the domestic market by indirectly controlling the price.