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International Trade: Restrictions

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Should we restrict international trade? Why or why not? What are the pros and cons? Let's see both sides of this complex issue. HINT: Remember that there are different and legitimate stakeholders - all of whom have different perspectives about this issue - employees, employers, consumers, business owners, investors, businesses, government, suppliers, unions, etc.

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We should not restrict international trade. International trade helps us consume products that our country cannot produce. It directly helps the consumer. International trade promotes international peace and amity. Further, the surplus that a country produces is used properly because of international trade. International trade helps reduce fluctuation in ...

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Protection of local industries is explained in this response. The answer includes a reference.

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International Trade Restrictions

Suppose that the world price for steel is below the U.S. domestic price, but the government requires that all steel used in the United States be domestically produced.

a. Use a diagram like the one in Exhibit 5 to show the gains and loses from such a policy.
b. How could you estimate the net welfare loss (deadweight loss) from such a diagram?
c. What response to such a policy would you expect from industries (like automobile producers) that use U.S. steel?
d. What government revenues are generated by this policy?
Please see attached for graph. Wait for it to load. It may take a couple seconds.

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