These notes are taken at the 1 o'clock lecture. Prof. Matthew first finished the remaning part of the chapter on externalities, then he went over Chapter 22 International Trade.
 

• Administrative stuff. Structure of the exam, Q&A sessions, etc.
• Finishing Externalities (Chapter 20)
• Problem of direct controls of reducing pollution by the same amount in every firm. (Slide #15)
• It is inefficient because the MCs of pollution abatement are not the same across firms.
• A partial solution - marketable permits. (Slide #16)
• The global warming example. (Slide #17).
• Chapter 22 International trade.
• Comparative advantage and absolute advantage.
• The Farmland and Mobilia example. (Slide #4 - 14).
• Production and consumption w/o trade.
• Production and consumption w/ trade.
• Expanding consumption possibilities w/ trade.
• Distribution effect of free trade (Slide #16-17)
• Better off at the national level, but some individuals are hurt (E.g.. car makers in Farmland in the above example).
• Trade restrictions (out of time, he went over this part very quickly).
• Tariffs and quota
• Effects of tariff (Slide # NA, the one with this title). Effects of quota. Difference is who gets the revenue.