Jenn

AP Microeconomics Chapter 9 Quiz Mr. Grochowski H 507 Name: Jenn Kim


 * 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 market price is above the domestic price, the nation exports. When the nation exports, the producers are better off than consumers. The consumer surplus decreases because the price goes up. On the other hand, the producer surplus increases because the price increases, and there is a new market of exports. Before, this was a surplus but now can be exported. Therefore, the producers are able to attain more surplus than before international trade. The total surplus overall increases because of an addition of exports of the surplus.


 * 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 or quota on a good domestically, the quantity demanded decreases, but tries to reach the equilibrilium price of the good. Unfortunately, dead weight loss occurs that lowers the efficiency of the good because the market here is unable to afford the good at the price of the tariff put forth by the government.

Tariffs are taxes put on goods that are produced outside of your country but sold in your country. Tariffs ultimately raise the price of imported goods above the world price which reduces the number (quantity) of imports. Because the money from the tariff goes to the government, there is a dead weight loss, causing the total surplus of the market to decrease. However, quotas are just restrictions on the amount of the good able to be imported into your country. However, quotas don’t produce dead weight losses since its just restricts the quantity of goods imported therefore doesn’t interfere with the price of the good.
 * 1) 3 How what is the differences and similarities between tariffs and quotas?