Matakuliah
Tahun
: F0882 - Economic Analysis
: 2009
APPLIED MICRO ECONOMICS:
INTERNATIONAL TRADE AND
GOVERNMENT
Chapter 5
Learning Outcomes
•
•
•
•
•
•
•
The Nature of International Trade
Comparative Advantage among Nations
Protectionism
Government Control of the Economy
Government Expenditures
Economics Aspects of Taxation
Antitrust Policy
Bina Nusantara University
3
The Nature of International Trade
International vs. Domestic Trade
1. Expanded trading opportunities
2. Sovereign nations
3. Exchange rate
The Sources of International Trade In Goods and Services
1. Diversity in Natural Resources
2. Differences in Tastes
3. Differences in Cost
Bina Nusantara University
4
Comparative Advantage Illustrated
With Many Commodities, There Is a
Spectrum of Comparative Advantages
Triangular Trade Benefits All
Protectionism
1. Supply and Demand Analysis of Trade and Tariffs 
Free Trade vs. No Trade, Trade Barriers, The Economic
Cost of Tariffs
2. Tariffs create economics inefficiency. When tarrifs are
imposed, the economic loss to consumers exceeds the
revenue gained by the government plus the extra profits
earned by producers.
Bina Nusantara University
8
Effect of a Tariff
Economic Cost of a Tariff
Government Taxation and Expenditure
The Tools of Government Policy
1. Taxes
2. Expenditures
3. Regulations.
Bina Nusantara University
11
Chapter 16 Figure
16-1
Government’s Share of the Economy Has
Grown Sharply
Government Spending Is Highest in HighIncome Lands, 1999
The Functions of Government
1. Improving Economic efficiency
2. Reducing economic inequality
3. Stabilizing the economy through macroeconomic
policies
4. Conducting international economic policy.
Bina Nusantara University
14
Antitrust Policy