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Chapter 34: Q. 25RQ (page 832)

How is international trade, taken as a whole, likely to affect the average level of wages?

Short Answer

Expert verified

Increased international trade increases the level of wages.

Step by step solution

01

Definition

When the exchange of goods is done from one country to another it is called international trade.

02

Explanation

International trade has a direct effect on the level of wages as international trade increases that means more goods have to be manufactured due to which the wages paid to employees increases but at some point, it harms the employee because work pressure increases.

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Most popular questions from this chapter

Show graphically that for any tariff, there is an equivalent quota that would give the same result. What would be the difference, then, between the two types of trade barriers? Hint: It is not something you can see from the graph.

Assume two countries, Thailand (T) and Japan (J), have one good: cameras. The demand (d) and supply (s) for cameras in Thailand and Japan is described by the following functions:

QdT = 60 鈥� P

QsT = 鈥�5 + 1/4 P

QdJ = 80 鈥� P

QsJ = 鈥�10 + 1/2 P

P is the price measured in a common currency used in both countries, such as the Thai Baht.

a. Compute the equilibrium price (P) and quantities (Q) in each country without trade.

b. Now assume that free trade occurs. The freetrade price goes to 56.36 Baht. Who exports and imports cameras and in what quantities?

Does international trade, taken as a whole, increase the total number of jobs, decrease the total number of jobs, or leave the total number of jobs about the same?

Why do you think labor standards and working conditions are lower in the low-income countries of the world than in countries like the United States?

What is dumping? Why does prohibiting it often work better in theory than in practice?
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