(a)
To explain:
The possible benefits and costs of a commercial policy designed to follow the given goal.
Explanation of Solution
Before saving any job in the industry it must be created first. Importing restrictions may save domestic jobs but at the same time the cost which is to be incurred to the consumers may be greater than the benefits for those who retain their jobs.
Comparative advantage refers to the benefits of producing goods and services at lower
(b)
To explain:
The possible benefits and costs of a commercial policy designed to follow the given goal.
Explanation of Solution
In this policy, people used to believe that the domestic government should take necessary steps to offset the advantage of foreign firms because foreign workers are always willing to work on a very low level of wages. Imposing restrictions will also eliminate the comparative advantage of foreign firms. By doing these, domestic consumers will worse off and undermine the basis of economy efficiency.
Comparative Advantage:
Comparative advantage refers to the benefits of producing goods and services at lower opportunity cost than the other country.
(c)
To explain:
The possible benefits and costs of a commercial policy designed to follow the given goal.
Explanation of Solution
Government revenue is being generated by tariff on trade. There are industrial countries for which income taxes are easy to collect and it rarely justifies tariffs based on the revenue generated for government spending. But there are many developing countries which find income taxes very difficult to levy and to collect tariffs is very easy for them. In developing countries, Observation of trade flows makes tariffs a very popular tax, and for which their revenue requirements may provide a valid justification for their existence.
Comparative Advantage:
Comparative advantage refers to the benefits of producing goods and services at lower opportunity cost than the other country.
(d)
To explain:
The possible benefits and costs of a commercial policy designed to follow the given goal.
Explanation of Solution
The industries which are very critical to the national defense should be protected from foreign competitions so that their existence is ensured. Likewise, proper care must be taken to highly ensure that the national defense arguments are not to be used to protect the countries other than those who are very crucial to national defense. The protection from foreign competition is very necessary so that the key defense related industries should continue to produce. For example, the shipbuilding industry is necessary in war since foreign made ships are not to be used at that time.
Comparative Advantage:
Comparative advantage refers to the benefits of producing goods and services at lower opportunity cost than the other country.
(e)
To explain:
The possible benefits and costs of a commercial policy designed to follow the given goal.
Explanation of Solution
Protecting infant industries is necessary for countries so that when the time is needed to be competitive, they can stand against the rest of the world. Nations are often inclined to protect new industries so that these new industries need adequate time to develop and to establish themselves to be more efficient enough. With the help of this, their costs are even no longer higher than those of foreign rivals. The main motive of such protection is to subsidize the costs. When the infant industry gets maturity and achieves enough size, such protection is withdrawn, and the industry is ready to compete with foreign competitors.
Comparative Advantage:
Comparative advantage refers to the benefits of producing goods and services at lower opportunity cost than the other country.
(f)
To explain:
The possible benefits and costs of a commercial policy designed to follow the given goal.
Explanation of Solution
An industry in which the cost of producing a unit of output fall due to increase in output is produced is an increasing return to scale. Strategic trade policy is intended to provide domestic increasing return to scale with an advantage over there foreign competitors. Opportunity cost falls in some industries with the increased level of output, such an increasing return to scale will require concentrating on production.
Comparative Advantage:
Comparative advantage refers to the benefits of producing goods and services at lower opportunity cost than the other country.
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Chapter 21 Solutions
Microeconomics (MindTap Course List)
- Exporting countries Which of the following will be true, everything else remaining constant, for a country that exports some good? a)The greater the price elasticity of supply for the good in the exporting country, the greater the volume of exports. b) The more that consumers in the exporting country respond to a change in price, the greater will be the gains from trade. b) The smaller the price elasticity of demand and supply in the exporting country, the greater the gains from trade. c) Some domestic suppliers will lose surplus while others will gain surplus. Choose the statements that match the question and briefly explain your reasoning to understand the question better. Thankyou.arrow_forwardSummarize the arguments in support of restricting imports.arrow_forwardThe Smoot-Hawley Act tried to divert consumer demand away from foreign products by Multiple Choice demanding local content requirements. O exporting more products to Europe. O subsidizing domestic businesses. O creating a trade deal with Canada and Mexico. O establishing tariff barriers.arrow_forward
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- Assume that you have been hired by an International Organization to be consulted on various issues that the country Motherland faces. For this exercise, assume that Motherland is a small agricultural economy.The biggest trading partner of Motherland is the United States. Unlike Motherland, the United States is a large industrial country Motherland imports electronics from the United States. The government of Motherland is considering to impose quotas on these electronics imports coming from the United States. Would you recommend it? Explain your answer. In your explanation, distinguish the effect on the consumers of electronics, the domestic producers of electronics and the government.Your explanation should not exceed 200 words.arrow_forwardAdvantages of implementation of import ban on certain products.arrow_forwardIf the United States adopts a law that every good imported from another country must be visually inspected by government inspectors, then this law might be considered as ______________. Group of answer choices a government bureaucracy a non-tariff barrier an import quota a quotaarrow_forward
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