Problem

How does the cost of "saving" jobs in protected i…

Problem 7 Easy Difficulty

How does the cost of "saving" jobs in protected industries compare to the workers' wages and salaries

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Principles of Microeconomics for AP® Courses

Chapter 20

Globalization and Protectionism

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Video Transcript

right to be looking at the costs of saving jobs and how it actually compares through the worker's wages and salaries. A. Specifically in a protected industry to start off. What is protectionism right and how an industry is protected. So these were simply policies form for reduction or blocking of international trade. Now this could be through multiple things that I've talked about in previous videos, glaring tariffs and quotas simply for domestic producers to be shielded from foreign competition. Right? So let's dive deeper into the wages and salaries portion. This question, um, saving jobs through protectionism does not actually all go towards saying it's up right, even though it's in the name. Most of the money does go to other areas of the company and therefore leaving a little portion for the job. So let's take an example here. So suppose there's a tear if put on plays for textile imports, right? So suppose we have country a here right country age, and they are supplying Exhale right there, exporting text. So American textile companies who produce their own textile are protected right as importers of textile will have to pay more money to suppose on the company that imports this price. So I am the bigger company here. I usually figure companies import important their materials for cheaper costs to suppose on the bigger company here. And I am importing from country A right now because there is a terror right? I usually mark terrorist like this. So suppose there's a tear if these red marks meaning that people like companies who are producing their own textile like their own wool or whatever. Um, they are actually protected, right? They're the ones who have a cheaper so they will earn greater profits right and utilize it on, improving equipment, expanding, you know, bigger bonuses and refrain from workers getting fired. So you see how enlisted multiple things there. So with this extra money, they will do everything to improve the company, including expanding and everything, and also saving jobs and refraining from people getting let go. So to actually save the job, you will take the money that's left over from all the other you know, equipment and whatever. So the money that's left over and more right to actually save one job, thus making it more expensive to save a job rather than letting him or her go right. So it's It's all a matter of opportunity costs, Um, so from keeping employees versus letting him go. So simply the simple equation that will go with you is that the cost of sieving? Great. Saving a job. Sorry, Um, is actually more and the cost of on employment. Right? So in certain cases, it is more cost efficient for business. Toe is this system let go off the employees rather than saving it due to protectionism. And this is often found in multiple protective industries. All right, I'll see you guys in the next one.

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