Chapter 20: Q. 51 (page 491)
What are some examples of innovative products that have disrupted their industries for the better?
Some examples of innovative products that have disrupted the industry are:
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Do the jobs for workers in low-income countries that involve making products for export to high-income countries typically pay these workers more or less than their next-best alternative?
Trade has income distribution effects. For example,
suppose that because of a government-negotiated
reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you expect this pattern of trade to increase or decrease jobs and wages in the paint industry in Germany? The alarm clock industry in Germany? The paint industry in Czech Republic? The
alarm clock industry in Czech Republic? What has to happen for there to be no increase in total unemployment in both countries?
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?
How is international trade, taken as a whole, likely to affect the average level of wages?
Economists sometimes say that protectionism is the “second-best” choice for dealing with any particular problem. What they mean is that there is often a policy choice that is more direct or effective for dealing with the problem—a choice that would still allow the benefits of trade to occur. Explain why protectionism is a “second-best” choice for:
a. helping workers as a group
b. helping industries stay strong
c. protecting the environment
d. advancing national defense
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