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Chapter 21: Q 3. (page 521)

Explain how trade barriers save jobs in protected industries, but only by costing jobs in other industries.

Short Answer

Expert verified

Because trade barriers affect other industries.

Step by step solution

01

Step 1. Definition

Trade barriers are defined as the protectionist form of trade that is put by the governments to have a limited trade between various nations and economies.

02

Step 2. Explanation

This happens because trade barriers increase the price of goods in sheltered industries. And maybe those products are used as inputs in other industries this increase their production costs and then their prices will also increase and in turn, their sales decrease due to increased prices. When sales have decreased employment also declines because now they produce less because of less demand.

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Most popular questions from this chapter

You have just been put in charge of trade policy for Malawi. Coffee is a recent crop that is growing well and the Malawian export market is developing. As such, Malawi coffee is an infant industry. Malawi coffee producers come to you and ask for tariff protection from cheap Tanzanian coffee. What sorts of policies will you enact? Explain.

How does protectionism affect the price of the

protected good in the domestic market?

Is international trade likely to have about the same effect on everyone鈥檚 wages?

Who gains and who loses from trade?

What are some ways that governments can help people who lose from trade?
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