Consumer surplus
Domestic supply
Price of
equilibrium
Producer surplus
Equilibrium quantity
Domestic demand
Quantity
Trade Determinant
Profit
Comparative
World price is
the price applied in
world market.
Domestic
price is
opportunity cost in
producing.
Exporting Country
Price
Domestic supply
A
Price after
trading
Price before
trading
World price
B
C
Export
Domestic
demand
Domestic
supply
Domestic demand
Quantity
Importing Country
Price
Domestic supply
A
Price before
trading
Price after
trading
D
World price
Domestic demand
Import
Domestic
supply
Domestic
demand
Quantity
Trade Policies
Fare on
imported goods
decreases import
quantity, increases
domestic price,
decreases consumer
surplus.
Import quota
decreases import
quantity, increases
domestic price,
decreases consumer
surplus.
Domestic supply
A
B
Price with
fare
Price
without
fare
Fare
World price
Domestic demand
G
Import with fare
S
1
S
2
D
2
Quantity
S
1
Domestic supply
Equilibrium without quota
Quota
Domestic demand
+
Domestic import
A
Domestic price
with quota
World price =
price without
quota
B
C
E F
World price
Domestic demand
G
Import with quota
S
1
S
2
D
2
Quantity
D
1
Domestic supply
Export
Domestic supply
Quota
World price =
price without
quota
Domestic price
with quota
A
B
D
E
Domestic demand
D
1
D
2
Q Q
Quantity
S
1
Q2S Q
Limitation of Trading
Arguments
Labour
Protection as
bargaining
power
National
security
Limitation of Trading
Small
industry
Unfair
competition
Mineral Economics