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    Chapter 9

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    Ngọc Linh
    Restricting trade is sometimes argued as a way to protect domestic jobs, defend national security, and help infant industries grow, though it also risks unfair retaliation and prevents countries from trading in areas of comparative advantage. Free trade allows countries to specialize and import goods that other countries can produce at a lower relative cost, while exporting goods that the country has a comparative advantage in producing, which benefits consumers and producers.

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    Chapter 9

    Uploaded by

    Ngọc Linh
    5 views1 page
    Restricting trade is sometimes argued as a way to protect domestic jobs, defend national security, and help infant industries grow, though it also risks unfair retaliation and prevents countries from trading in areas of comparative advantage. Free trade allows countries to specialize and import goods that other countries can produce at a lower relative cost, while exporting goods that the country has a comparative advantage in producing, which benefits consumers and producers.

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    Restricting trade is sometimes argued as a way to protect domestic jobs, defend national security, and help infant industries grow, though it also risks unfair retaliation and prevents countries from trading in areas of comparative advantage. Free trade allows countries to specialize and import goods that other countries can produce at a lower relative cost, while exporting goods that the country has a comparative advantage in producing, which benefits consumers and producers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    5 views1 page

    Chapter 9

    Uploaded by

    Ngọc Linh
    Restricting trade is sometimes argued as a way to protect domestic jobs, defend national security, and help infant industries grow, though it also risks unfair retaliation and prevents countries from trading in areas of comparative advantage. Free trade allows countries to specialize and import goods that other countries can produce at a lower relative cost, while exporting goods that the country has a comparative advantage in producing, which benefits consumers and producers.

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    © All Rights Reserved
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    protecting jobs

    defending national security

    helping infant industries arguments for restricting trade country has comparative advantage in the good
    PD < PW
    preventing unfair competition
    under free trade, country exports the good
    The World Price and Comparative
    responding to foreign trade restrictions Advantage country does not have comparative advantage
    PD > PW
    under free trade, country imports the good
    Tariff Trade Restriction Chapter 9
    A small economy is a price taker in world
    markets
    Consumers enjoy increased variety of goods
    The Small Economy Assumption
    No seller would accept less than PW
    Producers sell to a larger market, may achieve When a small economy engages in free trade
    lower costs by producing on a larger scale No buyer would pay more than PW

    Competition from abroad may reduce market Benefits of International Trade


    power of domestic firms, which would increase
    total welfare

    Trade enhances the flow of ideas, facilitates


    the spread of technology around the world

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