Explanation According to the theory of a legal system, secure property rights, rule of law and enforcement of contracts, and the government regulation increase the gain from the trade. The government imposes regulation for protecting infant industries from competition, protects the domestic producers, reduces the general price level, raises wages, and controls the layoff of labors. However, the government regulates import and export by imposing import quota and tariff. The tariff will reduce the import form the rest of the world, which will lead to an increase in the domestic price level; hence, the producers in the domestic...

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN: 9781305506725

Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher: Cengage Learning

See similar textbooks

Question

Chapter 16, Problem 13CQ

To determine

Explain the impact of regulation on the gain from trade.

Expert Solution & Answer

Chapter 16 Solutions

Economics: Private and Public Choice (MindTap Course List)

Ch. 16 - Prob. 1CQ Ch. 16 - Prob. 2CQ Ch. 16 - Prob. 3CQ Ch. 16 - Prob. 4CQ Ch. 16 - Prob. 5CQ Ch. 16 - Prob. 6CQ Ch. 16 - Prob. 7CQ Ch. 16 - Prob. 8CQ Ch. 16 - Prob. 9CQ Ch. 16 - Prob. 10CQ

Ch. 16 - Prob. 11CQ Ch. 16 - Prob. 12CQ Ch. 16 - Prob. 13CQ Ch. 16 - Prob. 14CQ

Knowledge Booster

Similar questions

If opening up to free trade would benefit a nation, then why do nations not just eliminate their trade barriers, and not bother with international trade negotiations?
You just overheard your friend say the following: Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade. How would you respond?

Recommended textbooks for you

Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Macroeconomics
Economics
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Cengage Learning