Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 8, Problem 13Q
To determine
The reason for the decline of wage and employment of the country that engages in free trade.
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What are the disadvantages of Free Trade
Since many companies cut jobs or outsource overseas when they cannot compete with foreign companies, does that mean free trade is a bad idea and does not serve our interests?
A friend tells you the following: “Free trade sounds good, but a country like Honduras doesn’t have any comparative advantage compared to the United States. Therefore, trade with us will exploit them and make their economic situation worse.” Explain to your friend the error in his thinking.
Chapter 8 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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Similar questions
- From the trade model, we found that in most cases, trade creates value. Where do we see that conclusion in the Supply and Demand model? You should be able to answer this in a few sentences.arrow_forwardWhich of the following is not a true statement about gains from trade? Select the correct answer below: If a country experiences gains from trade, it is better off than it would be without trade. Gains from trade means an increase in total surplus. Gains from trade are typically not distributed equally between consumers and producers. Gains from trade only benefit producers.arrow_forwardwhich kind of trade is more beneficial for an economy, liberalized trade OR restricted trade? Give reasons in proper points to prove your argument.arrow_forward
- Under what conditions does comparative advantage lead to gains from trade?arrow_forwardListen carefully to the podcast titled 'Is America losing faith in Free Trade?. What would help explain why support for trade liberalisation in places such as the United States has decreased in the past decade even though economists argue free trade is beneficial for the economy? The benefits and costs of trade are unequally distributed within society. The benefits of free trade tends to fall on people who are less well off, who either lose their jobs or lose wages to other countries which angers the wealthy investors. O The wage gap between high and low-skilled workers is closing which decreases levels of productivity. The benefits of free trade tend to fall on people who are less well off, who either lose their jobs or lose wages to other countries.arrow_forwardWhat are the disadvantages and advantages of free trade?arrow_forward
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