that, for some nations, the production of a particular good is a key component of national identity. In

Japan, the production of rice is culturally very important. It may be difficult for Japan to import rice from a

nation like Vietnam, even if Vietnam has a comparative advantage in rice production.

Chapter 20

1. This is the opposite case of the Work It Out feature. A reduced tariff is like a decrease in the cost of

production, which is shown by a downward (or rightward) shift in the supply curve.

2. A subsidy is like a reduction in cost. This shifts the supply curve down (or to the right), driving the price of

sugar down. If the subsidy is large enough, the price of sugar can fall below the cost of production faced by

foreign producers, which means they will lose money on any sugar they produce and sell.

3. Trade barriers raise the price of goods in protected industries. If those products are inputs in other
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