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12 Cards in this Set
- Front
- Back
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Deadweight Loss (rvw pg. 163)
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The fall in total surplus that results from a market distortion, such as a tax
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The losses to buyers and sellers from a tax exceed the revenue raised by the governemtn.
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True
Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade. (ex. pg 163) |
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What determine whether the deadweight loss from a tax is large or small?
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the Price Elasticities of demand
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When Supply is relatively inelastic the deadweight loss of a tax is small
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true
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when supply is relatively elastic the deadweight loss of a tax is small
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False!
It's large! pg. 165 |
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When demand is relatively inelastic, teh deadweight loss of a tax is small
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true
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when demand is relatively elastic the dead weight loss of a tax is large
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true
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The GREATER the elasticities of Supply & Demand, the GREATER the deadweight loss of a tax
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TRUE! pg. 166
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World Price
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The price of a good that prevails in the world market for that good
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The gains and losses of an Exporting Country are:
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When a country allows trade and bcomes an EXPORTER of a good, domestic producers (suppliers) of the good are <i>better off</i>, and domestic consumers are worse off
Trade raises economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers--pg.181 |
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The gains and losses of an Importing country are:
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When a country allows trade and becomes an IMPORTER of a good, domestic consumers of the good are better off, and domestic producers of the good are WORSE OFF
Trade raises the economic well being of a nation in the sense that the gains of the winners exceed the losses of the losers |
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Tariff
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a tax on goods produced abroad and sold domestically (imports)
A tariff will reduce the quantity of imports and moves the domestic market closer to its equilibrium point <i>without trade</i> |
