AP Microeconomics Flashcards: International Trade and Public Policy
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 10 cards to help you master important concepts.
List the four key areas that are affected by the implementation of a tariff.
Tariffs affect the domestic price, quantity, government revenue, and both consumer surplus and total economic surplus.
Card 1 of 10
All Flashcards (10)
List the four key areas that are affected by the implementation of a tariff.
Tariffs affect the domestic price, quantity, government revenue, and both consumer surplus and total economic surplus.
How does opening an economy to international trade alter the equilibrium price compared to autarky?
When an economy opens to trade, the equilibrium price can become higher or lower than the price under autarky, depending on the world price.
If a country with a low domestic price for wheat opens to trade, what happens to its consumer and producer surplus?
The country will export wheat, causing the domestic price to rise; this leads to a decrease in consumer surplus and an increase in producer surplus.
What fills the gap between domestic supply and demand when an economy is open to trade?
The gap between domestic supply and demand in an open economy is filled by international trade, either through imports or exports.
Define a tariff.
A tariff is a tax that a government places on imported goods, which affects domestic price, quantity, government revenue, and consumer surplus.
A government wants to raise money by influencing international trade. Should it use a tariff or a quota?
It should use a tariff, as tariffs are taxes on imports that generate government revenue, whereas quotas do not.
How do quotas impact the quantities of goods produced domestically?
By limiting imports, quotas alter the total quantity of goods available, which can lead to higher domestic prices and an increase in the quantity produced by domestic firms.
Define a quota in the context of international trade.
A quota is a government-imposed limit on the quantity of a good that can be produced or imported, which affects price and consumer surplus.
What is the primary effect of an import quota on domestic price and consumer surplus?
An import quota restricts the supply of a good, which leads to a higher domestic price and a decrease in consumer surplus.
If a country that imports shoes imposes a tariff, what is the resulting change in the market outcome for domestic shoe producers?
The tariff raises the domestic price of shoes, which increases the quantity supplied by domestic producers and raises their producer surplus.