COLEGIO DE LA PURISIMA CONCEPCION

The School of the Archdiocese of Capiz

Roxas City

College of Business, Management and Accountancy

BA 1 – BASIC MICROECONOMICS
First Semester 2020-2021

Name: LIRA S BALASABAS

Activity 7:
Research on the following: (Answer briefly)

1. What determines how much of a good a country will import or export?

Answer: A low domestic price indicates that the country has a comparative advantage in
producing the good and that the country will become an exporter. A high domestic price
indicates that the rest of the world has a comparative advantage in producing the good
and the country will become an importer.

2. Who benefits from trade? Who does trade harm?

Answer: When a country allows trade and becomes an importer of a good, domestic
consumers are better off and domestic producers are worse off. Trade raises the economic
well-being of a nation in the sense that the gains of the winners exceed the losses of the
losers.

3. If policymakers restrict imports, who benefits? Who is harmed?

Answer: Domestic sellers are better off and domestic buyers are worse off. Although
domestic producers are better off, the losses to consumers exceed these gains.

4. What are some common arguments for restricting trade? Do they have merit?
Answer:
The Jobs Argument
The National-Security Argument
The Infant-Industry Argument
The Unfair-Competition Argument
The Production-as-a-Bargaining-Chip Argument