Well, I'll add to that- to fully understand a tariff you need to first understanding we are talking about a free market economy within the context of a larger world economy. When a county that has more money going out and less money going in the strength of its currency is affected. When the currency weakens it has many negative effects for all in that economy, Tariffs are used to balance the economy and are essential for the economy to expand within the larger world market (depending on how they are used in conjunction with other policies). Without them the overall economy could deflate so to speak. Which has a whole series of negative effects leading to lowering the value of the currency (which equals rising costs on everything fro the people) The difficulty it seems is only just seeing it as a tax. Its not a tax, its a tariff, which serves a multitude of purposes
before the tariff, the whole area over the world price and under the demand curve was consumer surplus. Because of the tariff, some of the consumer surplus is now tariff revenue. The Rest of it are these two triangles. They were originally part of the consumer surplus. Just compare the two graphs (with and without the tariff)
Well, I'll add to that- to fully understand a tariff you need to first understanding we are talking about a free market economy within the context of a larger world economy. When a county that has more money going out and less money going in the strength of its currency is affected. When the currency weakens it has many negative effects for all in that economy, Tariffs are used to balance the economy and are essential for the economy to expand within the larger world market (depending on how they are used in conjunction with other policies). Without them the overall economy could deflate so to speak. Which has a whole series of negative effects leading to lowering the value of the currency (which equals rising costs on everything fro the people) The difficulty it seems is only just seeing it as a tax. Its not a tax, its a tariff, which serves a multitude of purposes
An hour and 15minute class summed up and better explained in 10 minutes
my professor just reads slides and everyone in class fails because of it.. YOU ARE SAVING MY GRADES KING!
I'm so sorry that your prof sucks and I'm glad to help out. Hang in there!
Great video - really helped clear up my confusion around change in producer surplus!
thank you so much that was so helpful!!
No problem!
So clear
Thank you thank you!!
i literally adore you
I would've scored an extra 20% on my midterms if I'd watched this instead of my lecture
thanks that you used the funny tone to teach economy XD
So, you explained what the deadweight loss is... but why do those two red triangles represent deadweight loss? What are they depicting?
before the tariff, the whole area over the world price and under the demand curve was consumer surplus. Because of the tariff, some of the consumer surplus is now tariff revenue. The Rest of it are these two triangles. They were originally part of the consumer surplus. Just compare the two graphs (with and without the tariff)
Can someone explain how bad tariffs are to Donald Trump