International Economics
Course 7 12-10-2018 Jurne Sleddens
North Korea (DPRK) is one of the most closed economies in the world but is not autarky.
Autarky = They consume what they produce.
Our benchmark: Autarky in North Korea
The domestc demand curve shows how the quantty of a good demanded by domestc
consumers depends on the good’s price.
The domestc supply curve shows how the quantty of a good supplied by domestc
producers depends on the good’s price.
The reason is that when they sell for less they have more demand and when they sell for more they
have a surplus which they want to sell.
Consumer surplus = Bargain (koopje) for consumers.
Example: Consumer A is willing to pay €1500 but it costs €1000 so the bargain is €500.
Consumer B is willing to pay €1200 but it costs €1000 so the bargain is €200.
Consumer C is willing to pay €0,05 but it costs €1000, so there is no bargain.
Producer surplus = Bargain for producer
Example: Seller A needs €45 to break-even but they sell €50, the bargain is €5.
Seller B needs €30 to break-even but they sell €50, the bargain is €20.
Effect of international traee (ipoortf
Suppose that North Korea opens its economy up.
Suppose that the world price of roses is lower than the domestc price.
What will be the efectt Will NK export or import rosest
Course 7 12-10-2018 Jurne Sleddens
North Korea (DPRK) is one of the most closed economies in the world but is not autarky.
Autarky = They consume what they produce.
Our benchmark: Autarky in North Korea
The domestc demand curve shows how the quantty of a good demanded by domestc
consumers depends on the good’s price.
The domestc supply curve shows how the quantty of a good supplied by domestc
producers depends on the good’s price.
The reason is that when they sell for less they have more demand and when they sell for more they
have a surplus which they want to sell.
Consumer surplus = Bargain (koopje) for consumers.
Example: Consumer A is willing to pay €1500 but it costs €1000 so the bargain is €500.
Consumer B is willing to pay €1200 but it costs €1000 so the bargain is €200.
Consumer C is willing to pay €0,05 but it costs €1000, so there is no bargain.
Producer surplus = Bargain for producer
Example: Seller A needs €45 to break-even but they sell €50, the bargain is €5.
Seller B needs €30 to break-even but they sell €50, the bargain is €20.
Effect of international traee (ipoortf
Suppose that North Korea opens its economy up.
Suppose that the world price of roses is lower than the domestc price.
What will be the efectt Will NK export or import rosest
