ECON 201 Chapter Notes - Chapter 9: Comparative Advantage
Document Summary
Trade is beneficial because: trade makes people better off when preferences differ, trade increases productivity through specialization & the division of knowledge, trade increases productivity through comparative advantage. Protectionism- is the economic policy of restraining trade through quotas, tariffs, or other regulations that burden foreign producers but not domestic producers. Trade quota- a restrictions on the quantity of goods that can be imported: Imports > quota amount are forbidden or heavily taxed. Tax revenue (collected by gov"t) = tariff x quantity of imports. Qfree trade demand > qfree trade supply (difference comes from imports) Trade reduces the number of jobs in the u. s. It"s wrong to trade w/ countries that use child labor. We need to keep certain industries at home for reasons of national security. We need to keep certain key industries at home b/c of beneficial spillovers onto other sectors of the economy.
