Question

1. Who are the winners and who are the losers from "free trade"?

2. Why do economists believe that a tariff is better than an import quota? (Actually, most economists do not like either!)

3. Why is the "infant industry" protectionist argument perhaps valid for some situations?

4. What is one argument for and one argument against NAFTA?

5. Evaluate this statement: "If a country bans an import, smuggling is inevitable. We should welcome smuggling because it increases consumer welfare."

6. Suppose Country A can produce 200 toys or 400 pineapples per day, while Country B can produce 300 toys or 900 pineapples per day. Where do the comparative advantages lie? Should trade take place?

7. What is dumping? Why is this done?

8. Discuss this statement: "Free traders win the economic arguments, but protectionists (those who favor tariffs) often win the elections."

9. Do you believe that American consumers should boycott goods made by exploited workers in Less Developed Countries? Explain why this might or might not work.