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SALT LAKE COMMUNITY COLLEGE / Music / MUS 2400 / What do quotas do on the amount of imported goods?

What do quotas do on the amount of imported goods?

What do quotas do on the amount of imported goods?


School: Salt Lake Community College
Department: Music
Course: International Economics
Professor: Pook carson
Term: Spring 2017
Tags: Economics, International, supply, demand, and International Trade
Cost: 50
Name: ECON 2400-Midterm-Study Guide
Description: These notes cover majority of what will be on the Midterm Exam. I've tried to keep "Definitions" out since those are covered in all of my weekly notes. Instead of breaking the items down by module, I tried to lump categories together as best as I could. Each category is highlighted a different color, and the highlighting indicates something involved in the vocabulary. I've also posted a vocabulary
Uploaded: 03/16/2017
2 Pages 171 Views 2 Unlocks

ECON 2400: International Economics, Spring 2017 Study Guide Modules 1-6

What do quotas do on the amount of imported goods?

Supply & Demand 


• Movement along a supply curve for a product is caused by  a change in price.


• Determinants

oExpected price of a product in the future.


• Where supply and demand meet


• When price is above equilibrium 

• To calculate surplus amount, subtract demand (of that  QTY) from supply (of that QTY)

Types of Goods & Their Impacts 

⌦Normal Goods 

When does intraindustry trade happen?

• Decrease in price increases demand; vice versa ⌦Inferior Goods 

• Goods that are only purchased during financial struggle • Increase in income shifts demand for these left (lower). ⌦Complementary Goods 

• Goods that are purchased together

• Cameras and memory cards We also discuss several other topics like How does entry of ca ions into dendritic spine cause ampa receptors to move into postsynaptic membrane?

• Cross elasticity is negative

⌦Substitute Goods 

• Goods that are consumed in place of other goods when  prices rise/fall.


⌦Elasticity measures how responsive the quantity of a product  is to the price mathematically

What type of tarrif is ad valorem?

• Elastic: responsive

• Inelastic: nonresponsive

⌦Equation: Don't forget about the age old question of How does the tryptophan operon work?

• Percent change in QTY divided by percent change in price • (Q1-Q2)/[(Q1+Q2)/2] divided by (P1-P2)/[(P1+P2)/2] • Demand >1 = elastic; Demand <1 = inelastic If you want to learn more check out What are measurements of central tendencies?

oTechnology is not a determinant of demand elasticity • Supply = 0 perfectly elastic; Supply > 0 elastic

o Main determinant is how quickly producer can adjust  supply

⌦Perfectly Elastic 

• Supply curve is horizontal

Competitive Markets 

⌦Follow 4 basic assumptions:  

• Firms are free to enter and exit

• Firms and buyers have complete info

• There are many firms and buyers

• Firms sell identical products

⌦In the long run, competitive markets have zero total  economic profit.

• Economic profit = Total Revenue – Total Cost

• Accounting profit = Total Revenue – Implicit Cost ⌦Competitive firms make profit by producing QTY that price  equals marginal cost.

• When price falls below this, firms will exit the market ⌦Industry types:  

• Decreasing Cost Industry: downward slope Don't forget about the age old question of What is an example of social proof?

• Increasing Cost Industry: upward slope

Legal Framework & History of International Trade ⌦Chile applies the same tariff rate to all imported goods. ⌦When the TPA expired in 1994, U.S. lawmakers began to  embrace freer trade.

⌦Great Depression 

• Was the start of protectionism in the U.S. in 1929 • U.S. enacted higher tariffs – failed to protect the U.S.  because other countries responded with higher tariffs. ⌦GATT We also discuss several other topics like What are the stages of general adaptation syndrom (gas)?

• Nondiscrimination is required of all countries involved. • Involved multilateral concessions.

• WTO is part of GATT

• Has had 8 total rounds; last one – Uraguay Round o Compared East Asian Tigers to more protectionist  countries.

o Many countries joined to become founding members of  WTO

o China struggled to join because they were required to  meet strict free trade requirements before joining. ⌦RTAA 

• Involved bilateral concessions


• When a domestic firm files charges on a foreign firm for  undercutting the domestic price of a good.

International Trade 

⌦Ways to rate protectionism:

• Average Tariff on Dutiable Imports only averages the  categories in which a tariff is levied.

⌦Types of tariffs: If you want to learn more check out Why is self-defense justified?

• Specific Tariff: A flat rate applied to a category of goods. • Ad Valorem: A percentage rate applied to a category of  goods.

• Two-Part Tariff: When both a Specific Tariff and an Ad  Valorem Tariff are applied to the same good.

⌦When tariffs are levied, the domestic price must be raised to  match to prevent discrimination.

⌦Quotas put restrictions on the amount of goods imported


ECON 2400: International Economics, Spring 2017 Study Guide Modules 1-6

• Reduces domestic supply

• Raises domestic prices

⌦Trade Advantages

• Absolute Advantage: when countries produce something  with lower cost

• Comparative Advantage: when a country can produce  something at a lower opportunity cost

oFind opportunity cost by comparing production with  another country, find common denominator in all and  compare numbers to find the lowest.

oComparative Disadvantage will allow a country to trade  with countries that have lower opportunity cost. • Efficient production should be determined by evaluating  opportunity costs and making trade agreements. ⌦Intraindustry trade happens when countries import and  export similar goods.


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