Politicians often argue that a country's standard of living is reduced when it allows imports into the country. Offer an economically sound counter-argument
What will be an ideal response?
Specialization of labor is productive, so output is greater when people produce goods for which they have a comparative advantage—that is, goods for which the opportunity cost of producing is lower than in other nations. They trade for those goods for which they do not have a comparative advantage. International trade based on comparative advantage then increases total output of the two countries and can result in higher standards of living for citizens of both countries.
You might also like to view...
Refer to Table 18.1. M2 in this simple economy equals
A) $1,050. B) $4,050. C) $4,550. D) $5,100.
In the above figure, an increase in the quantity demanded is represented by a movement from point d to
A) point b only. B) point c only. C) point a. D) both points b and c.
A deficit will burden future generations
a. because the obligation to pay it off must be faced sooner or later. b. if it produces higher interest rates when the economy is near full employment. c. because future generations will have to pay taxes to fund the interest payments to Americans who hold the debt. d. All of the above are correct.
A government-inhibited good is a good which
A) is not subject to the principle of mutual exclusivity. B) the political process has deemed socially undesirable. C) can be consumed by one individual without affecting the consumption of another individual. D) the political process has deemed socially desirable.