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Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

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BuyFindarrow_forward

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter 28.4, Problem 1GE
Textbook Problem
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ANALYZE THE ISSUE Make an argument in favor of the European import restrictions. Make an argument against this plan.

To determine

Arguments for and against the import restrictions.

Explanation of Solution

Every economy has their own natural resourced which are being used for the production of goods and services for the society. The economies will produce the commodities in which it has the comparative advantage and imports the commodities in which it does not have the comparative advantage. This leads to the exchange of goods and services between the countries known as the international trade. It is given that the Europe have issued the import restriction policies in the economy.

The reason for the import restriction might be different. The first and foremost known reason is the protection of the infant industries. The infant industries arte the comparably new firms and industries in the economy. These domestic industries would require time to make use of the economies of scale in the economy. Thus, in order to protect these infant industries, the economy must impose the protectionism. Second argument might include the loss of employment to the workers due to unrestricted imports. When the import increases, it leads to the lock out of the loss making domestic firms and industries in the economy. As a result of this, many domestic workers will lose their job. The economy must protect the workers from this problem and that can be done through protectionism. When the higher barriers and taxes are imposed on imports, it will reduce imports and support the domestic firms and jobs of workers...

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