1. Explain how a tariff reduction causes an increase in the equilibrium quantity of imports and a decrease in

the equilibrium price. Hint:Consider the Work It Out "Effects of Trade Barriers."

2. Explain how a subsidy on agricultural goods like sugar adversely affects the income of foreign producers of

imported sugar.

3. Explain how trade barriers save jobs in protected industries, but only by costing jobs in other industries.

4. Explain how trade barriers raise wages in protected industries by reducing average wages economy-wide.

5. How does international trade affect working conditions of low-income countries?

6. 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?

7. How do trade barriers affect the average income level in an economy?

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20 • Review Questions 497
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