TRADE-RELATED DIAGRAMS

Question 1

Absolute advantage: production possibilities

Answer 1

Question 2

Absolute advantage production possibilities

Answer 2

Question 3

Absolute advantage production possibilities

Answer 3

Question 4

Comparative advantage production possibilities

Answer 4

Question 5

Tariff model; tariff imposed on good raises tax revenue but causes a welfare loss

Answer 5

Question 6

Removal of tariff increase imports from Q1Q2 to Q3Q4

Answer 6

Question 7

Tarriff set so price rises above domestic market equilibrium means there will be no imports and the market equilibrium will be determined domestically

Answer 7

Question 8

Reduction in tariff

Answer 8

Question 9

Impact of export subsidy on price of exports (vertical distance = subsidy per unit)

Answer 9

Question 10

Import Quota

Answer 10

Question 11

Welfare loss of an import quota

Answer 11

Question 12

Effects of the imposition of a tariff
1. Producer Surplus
2. Net welfare loss
3. Government revenue

Answer 12

Question 13

Effect of the imposition of a tariff
1. Consumer surplus

Answer 13