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Figure: Market Activity with and without Trade
Refer to the figure. Using the diagram for market activity with and without trade to consider the effects of a trade restriction that eliminated foreign trade in an economy, answer the following questions.
a. What is the dollar amount of deadweight loss created as a result of the trade restriction?
b. What is the dollar value of wasted resources as a result of the trade restriction?
c. What is the dollar gain in domestic producer surplus as a result of the trade restriction?
Law of Effect
A psychological principle that behaviors followed by pleasant outcomes are likely to be repeated, while those followed by unpleasant outcomes are less likely to be repeated.
Rewarded Responses
Behaviors or actions that receive positive reinforcement, which increases the likelihood of the behavior being repeated in the future.
Punished Responses
Behaviors that decrease in frequency because they are followed by unpleasant consequences.
Operant
In Skinner’s system, an instrumental response that is defined by its effect (the way it operates) on the environment.
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