Critique the infant industry or the labor argument for protection
What will be an ideal response?
Critique of the labor argument largely rests on the confusion between nominal wage rate differences and productivity wages.
Critique of the infant industry argument is based on 1 ) the rent seeking and misapplication of what it means to be an "infant" industry, 2 ) the government's ability to correctly identify such industries vs. the market's ability to do so, 3 ) the protection creates disincentives for efficiency and low-cost production.
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Salvador grows orchids to sell to local florists. When Salvador began raising his current crop of 1,000 orchids, he could sell them for $20 per plant, and he incurred shipping costs of $3 per plant. His cost of raising orchids is $8 per plant
When his crop was ready to ship, florists were only paying $9 per plant. Use marginal analysis to determine Salvador's best course of action given the drop in the price of orchids.
Refer to the figure above. A change in the budget constraint from B2 to B3 indicates:
A) a decrease in the price of jeans. B) a decrease in the price of sweaters. C) an increase in the consumer's income. D) a decrease in the consumer's income.