Multiple Choice
Which of the following best describes the motivation behind trade protectionism?
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9. International Trade
Arguments Against International Trade
Multiple Choice
Why might consumers support free trade while workers in specific industries oppose it?
A
Because consumers expect short-term unemployment to fall under free trade, while workers worry that it will increase costs for domestic producers.
B
Because consumers assume free trade raises government tariff revenue to fund public goods, while workers oppose it because it lowers product quality.
C
Because consumers believe free trade will protect domestic industries through increased exports, while workers fear more foreign ownership of firms.
D
Because consumers gain from lower prices and greater variety, while workers in import-competing industries face concentrated job losses and wage pressure.
Verified step by step guidance1
Step 1: Understand the concept of free trade, which allows goods and services to move across borders with minimal restrictions, leading to increased competition and efficiency.
Step 2: Recognize that consumers benefit from free trade because it typically results in lower prices and a greater variety of products due to increased competition and access to foreign goods.
Step 3: Identify that workers in specific industries, especially those competing with imports, may oppose free trade because it can lead to job losses and wage reductions in their sectors as domestic producers face tougher competition.
Step 4: Analyze the distributional effects of free trade, noting that while consumers experience widespread but often smaller gains, workers in import-competing industries face concentrated and significant losses.
Step 5: Conclude that the differing perspectives arise because consumers focus on overall benefits like lower prices and variety, whereas workers in vulnerable industries are concerned about their immediate economic security and employment prospects.
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