1 pts D Question 19 If an economist argues that all countries gain from trade, what reasoning is most likely underlying her argument? Trading with other countries does not affect the number or the type of remaining domestic jobs. Production according to the principle of comparative advantage lowers overall costs and therefore allows both countries to have a higher standard of living. Export industries are the most important part of the economy. Trading with other countries enriches those who work in the shipping industry, and shipping is a key sector of the economy.
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(Related to Solved Problem 7.3) A political commentator makes the following statement: The idea that international trade should be based on the comparative advantage of each country is fine for rich countries like the United States and Japan. Rich countries have educated workers and large quantities of machinery and equipment. These advantages allow them to produce every product more efficiently than poor countries can. Poor countries like Kenya and Bolivia have nothing to gain from international trade based on comparative advantage.
Juan N.
Here is an excerpt from an article by economist Pierre Lemieux: "In John Hicks's extraordinary book A Theory of Economic History (1969), one sees beautiful trade as an essential part of the modern economy. In the primitive economy based on custom or command, Hicks writes, "[t]here are farmers, and soldiers, and administrators; but there are no traders, no one who is specialized upon trade." There are no middlemen. The modern economy, on the contrary, is filled with middlemen from traders of raw materials, to stock exchange traders, a multitude of component and service suppliers, shipping companies, and at the end of the long chain, Amazon or Best Buy for the typical computer buyer. The reason for the beauty of trade lies in its bringing utility to the individuals involved and, in the long run, to most if not all individuals in society. Even monks benefit from trade. At any rate, there is no way to know if a poor of today would have been happier in a pre-modern economy; he might as well have been a serf. As Hicks says, "So long as the trade is voluntary, it must confer an All-round Advantage." This applies to trade over political borders as much as within them--if not more, for international trade also reduces the power of national leviathans." If he is correct in his point of view, which of the following would be true: Large governments help trade maximize its reach by involving a maximum number of administrators who act as public middlemen. Large governments are able to secure free trade so a growing government can create a freer economy. Large governments are a historical byproduct of free trading countries, naturally expanding to create a safety net for individuals unable to negotiate voluntary trades. Large governments are disrupted by trade because it introduces choices not offered by government provision, thereby undermining totalitarian influences.
Akash M.
Imports increase the domestic supply and lead to lower prices for consumers. Exports reduce the domestic supply and push prices upward. The net effect of international trade is an expansion in total output and higher income levels for both trading partners (law of comparative advantages). "Imports destroy jobs; exports create them. The average American is hurt by imports and helped by exports." Do you agree or disagree with this statement? Explain and support. Review absolute and comparative advantages. Personal private property protection allows for greater entrepreneurial ventures, and thus an expanding economy and job growth; can import tariffs and quotas reduce the benefits of trade? Review the mechanics of import tariffs and quotas and world price.
Jennifer S.
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