If you think you are well on top of the trade material presented you might want to consider the following issues.
Suppose a country such as Australia is a net exporter of a product produced by a competitive industry such as maize.
Suppose the government decides to impose an export tax on maize.
Show the following:
1. This tax will reduce the price of maize paid by consumers in Australia and increase their welfare compared to the situation where there is no tax.
2. Farmers growing maize lose as a consequence of the tax.
3. The tax is associated with deadweight losses in the sense that the value of the losses to local producers exceeds the gains to consumers plus the gain in tax revenue to the government.
It is a somewhat surprising set of outcomes until you understand the effects of the tax. Think about it and if you can explain what is going on post your views here!
A related question is set in next week’s tutorial.