Awww, it takes time and effort to become an efficient teacher. Please be patient with your teachers. They will be able to convey knowledge well at the end of the day. Happy learning! :)
Excuse me miss, but why is it that when a large country imposes a tariff, it reduces foreign prices? Could you explain the mechanics behind this, please?
A tax puts a wedge between the price paid by the buyer (it becomes higher than without tax) and the price received by the seller (becomes lower than without tax). When the country that imposes the tariff is *small*, the tariff will not affect the price received by the seller, but the buyers in the small country that imposes the tariff will have to absorb the entire tariff. Yet if the country that imposes the tariff is BIG with many consumers, who consume a large amount of the imported good from the selling country, then the tariff will affect the international price, causing the price received by the seller to drop - the situation is very similar to a typical tax analysis. Don’t’ remember about welfare effect of a tax? Watch the following clips. th-cam.com/video/9IaDOocAGpw/w-d-xo.html th-cam.com/video/VcBznrAtSFU/w-d-xo.html th-cam.com/video/fbCDOCA_HWU/w-d-xo.html
Sure. A tax puts a wedge between the price paid by the buyer (it becomes higher than without tax) and the price received by the seller (becomes lower than without tax). When the country that imposes the tariff is *small*, the tariff will not affect the price received by the seller, but the buyers in the small country that imposes the tariff will have to absorb the entire tariff. Yet if the country that imposes the tariff is BIG with many consumers, who consume a large amount of the imported good from the selling country, then the tariff will affect the international price, causing the price received by the seller to drop - the situation is very similar to a typical tax analysis. Don’t’ remember about welfare effect of a tax? Watch the following clips. th-cam.com/video/9IaDOocAGpw/w-d-xo.html th-cam.com/video/VcBznrAtSFU/w-d-xo.html th-cam.com/video/fbCDOCA_HWU/w-d-xo.html
I saw my professor's ppt says “Large” economy Effect of a tariffs on prices: When “t” is small: • Terms of trade gain are proportional to “t” (product of “t” and current imports) • Deadweight loss proportional to “t2 ” (product of “t” and the change in imports) Terms of trade wins when t is small Gains from having a small tariff I don't understand, can you please explain?Thank you
Simple but really good explanation, and easy to understand, thank you a lot! youre saving my online Economics semester!! 🥰
Glad to help!
Why can't teachers just explain it like you did? It's like they want us to be confused.
Awww, it takes time and effort to become an efficient teacher. Please be patient with your teachers. They will be able to convey knowledge well at the end of the day. Happy learning! :)
Excuse me miss, but why is it that when a large country imposes a tariff, it reduces foreign prices? Could you explain the mechanics behind this, please?
A tax puts a wedge between the price paid by the buyer (it becomes higher than without tax) and the price received by the seller (becomes lower than without tax). When the country that imposes the tariff is *small*, the tariff will not affect the price received by the seller, but the buyers in the small country that imposes the tariff will have to absorb the entire tariff. Yet if the country that imposes the tariff is BIG with many consumers, who consume a large amount of the imported good from the selling country, then the tariff will affect the international price, causing the price received by the seller to drop - the situation is very similar to a typical tax analysis.
Don’t’ remember about welfare effect of a tax? Watch the following clips.
th-cam.com/video/9IaDOocAGpw/w-d-xo.html
th-cam.com/video/VcBznrAtSFU/w-d-xo.html
th-cam.com/video/fbCDOCA_HWU/w-d-xo.html
May I ask why a part of the tariff was imposed on the foreign producers (area e) please?
Sure. A tax puts a wedge between the price paid by the buyer (it becomes higher than without tax) and the price received by the seller (becomes lower than without tax). When the country that imposes the tariff is *small*, the tariff will not affect the price received by the seller, but the buyers in the small country that imposes the tariff will have to absorb the entire tariff. Yet if the country that imposes the tariff is BIG with many consumers, who consume a large amount of the imported good from the selling country, then the tariff will affect the international price, causing the price received by the seller to drop - the situation is very similar to a typical tax analysis.
Don’t’ remember about welfare effect of a tax? Watch the following clips.
th-cam.com/video/9IaDOocAGpw/w-d-xo.html
th-cam.com/video/VcBznrAtSFU/w-d-xo.html
th-cam.com/video/fbCDOCA_HWU/w-d-xo.html
@@IrisFranz Thank you!
may I ask? for example,
what if the world supply function is Sd+w = 50+100P, then the tariffs is 70%
how can I get the new supply function?
Good one...
Thanks
But why do we have two supply curves?
Sd: domestic supply curve (under autarky); S(d+w): supply curve of domestic AND world imports. Best luck!
awesome explaination thank you 🙂
Glad it helped!
nice explanation, thank you!
Saksham Tanwar glad to help!
Could you please do its version for a small country??
th-cam.com/video/xHIKWqBj7kU/w-d-xo.html
@@IrisFranz thank you so much xo
I saw my professor's ppt says “Large” economy
Effect of a tariffs on prices:
When “t” is small:
• Terms of trade gain are proportional to “t”
(product of “t” and current imports)
• Deadweight loss proportional to “t2
”
(product of “t” and the change in imports)
Terms of trade wins when t is small
Gains from having a small tariff
I don't understand, can you please explain?Thank you
If terms of trade effect is greater than DWL, the terms of trade improves.
@@IrisFranz how does it relate to the amount of tariff
Please watch from 2:11 to 5:00. Tariff revenue = c+e.
what does P* represent?
That's the price before a tariff is imposed.