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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Consider the arguments for restricting trade.

a. Imagine that you are a lobbyist for timber, an established industry suffering from low-priced foreign competition, and you are trying to get Congress to pass trade restrictions. Which two or three of the five arguments discussed in the chapter do you think would be most persuasive to the average member of Congress? Explain your reasoning.

b. Now assume you are an astute student of economics (not a hard assumption, we hope). Although all the arguments for restricting trade have their shortcomings, name the two or three arguments that seem to make the most economic sense to you. For each, describe the economic rationale for and against these arguments for trade restrictions.

Subpart (a):

To determine
The arguments against and for imports and international trade.

Explanation

Lobbyists will always try to lobby the government to make and pass laws and regulations in their favor in order to profit from their activities. When the domestic price of timber is higher than the international price and the lobbyists face tough competition from the low-priced international competitors, they will try to persuade the government to pass restrictions on the imports and the main arguments for the purpose used by them will be as follows:

(1) The main argument of the lobbyists will be the job argument...

Subpart (b):

To determine
The arguments against and for imports and international trade.

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