Why would the establishment of protective trade barriers be a poor way of protecting workers in domestic industries?
What will be an ideal response?
First, protective barriers invite retaliatory trade actions by foreign countries, which can reduce exports and lower employment in exporting industries. Second, since consumer prices rise with the imposition of trade barriers, domestic workers in their role as consumers are worse off. Third, the best way to maximize the incomes of domestic workers is to allow them to specialize in what they do best (i.e., most efficiently) and trade freely.
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When an individual is frictionally unemployed, the unemployment arises in part from
A) a short-term elimination of jobs because of a slowdown in business activity. B) individuals searching for appropriate employment. C) the permanent elimination of jobs because of a change in the structure of the economy. D) a reduction in the overall demand for workers' skills.
Refer to Figure 5-1. The efficient equilibrium price is
A) $60. B) $50. C) $40. D) < $40.
Which of the following is a series of rules that stops trading on an exchange for a relatively short period of time?
A. Program trading B. Market limits C. Stop orders D. Circuit breakers
In the short run, if a perfectly competitive firm produced at the quantity of productive efficiency, would it generate the highest profit level possible? Why or why not?