How can tariffs lead to a situation in which all parties to a trade lose?
In effect, a tariff amounts to government intervention to rig prices in favor of domestic producers. This technique works only as long as foreigners accept the tariff exploitation passively?which they rarely do. More often, they retaliate by imposing tariffs or quotas of their own on imports from the country that began the tariff game. Such tit-for-tat behavior can easily lead to a trade war in which everyone loses through the resulting reductions in trade. Something like this, in fact, happened to the world economy in the 1930s, and it helped prolong the worldwide depression. Preventing such trade wars is one main reason why nations that belong to the World Trade Organization pledge not to raise tariffs.
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The law of comparative advantage explains why
What will be an ideal response?
Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run
A) output per capita will be greater in B than in A. B) output per capita will be greater in A than in B. C) economic growth will be higher in A than in B. D) more information is needed to answer this question.
One of the most important determinants of a good's price elasticity of demand is
A. the cost of producing the good. B. the profits of suppliers. C. the ease with which consumers can substitute other goods for that product. D. the numbers of buyers in the market.
Refer to the information provided in Table 6.1 below to answer the question(s) that follow. Table 6.1Number of Hamburgers per DayTotal UtilityMarginal Utility130?252?367?476?5?4Number ofSodas per DayTotal UtilityMarginal Utility120?235?347?457?5?7Refer to Table 6.1. The marginal utility of the second hamburger per day is
A. 10. B. 15. C. 22. D. 52.