AB224 UNIT 2 Assignment
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AB224 UNIT 2 Assignment
A positive statement concerns what it is, what it was, or what it will be. It contains no indication of what should be. Positive statements are contrasted with normative statements. In this quote, the following statements are positive; Workers in Asia often work in sweatshop conditions earning only pennies in an hour. The second positive statement is, American workers are more productive and as a result earn higher wages, (Brady, 2014). On the other hand, a normative statement is a statement that expresses opinion rather than the fact. It expresses a value judgement about whether a statement is subjectively desirable or undesirable. It concerns about what should be. In this quote, the following statement is normative. The government should enact legislation banning imports of low-wage Asian clothing.
The policy being advocated for is consistent with the statement about the wages and the productivities of the American and Asian workers. This is because cheap clothing imports to the American market would create unnecessary competition that would culminate in reduction of prices of clothes in the market. This would result in reduced sales volume by the American clothing vendors hence reduced wages for the American workers in the industry. To preserve them from this unnecessary competition, this policy should be enacted and advocated for in order to protect the American and Asian workers.
Such a policy however, is not efficient from the American point of view because it is likely to make some Americans better off while at the same time making other Americans worse off. Such a policy would make the American manufacturers in the clothing industry to behave like monopolies by setting high prices for the clothes they make thereby affecting most of the American consumers. The policy would however protect the American workers in the clothing industry because they would be able to get high wages per hour worked.
The low-wage Asian workers would be hurt by such a policy in the sense that the market for their products would contract. The market share for the Asian clothes would become small. The sales volume of the products made the Asian clothing manufacturers would decrease as a result and this would hurt the Asian workers in the sense that their wages would even decrease making them worse of compared to the American workers, (Gwartney, 2013).
If tariff a tax is enacted with the aim of protecting the American consumers and the American manufacturers from competition, the American consumers would be provided with a variety of products from which to choose from. They will have the choice to choose from either the American clothes or the Asian clothes in the market. So the consumers will see a variety of both the American and the Asian clothes in the vendors. They would also see reduced prices in the market due to increased competition in the market.
The tariff policy would have a better effect on the American workers in the sense that they would not be exploited by the monopolistic American manufacturers in the clothing industry through setting of very high prices, (Brady, 2014). The American consumers would benefit from the increased competition in the market because the quality of the products sold in the market would be high. The Asian workers in the clothing industry would also benefit in the sense that the market for their products would become larger and their wages are likely to improve with improvement in the sales volume.
The Frivoli tribe has comparative advantage in Spaghetti production. This is because they can produce 40 pounds per month when producing no meatballs compared to the 30 pounds of Spaghetti produced by Tivoli per month when producing no meatballs. The Tivoli tribe, on the other hand has comparative advantage in production of meatballs because they are able to produce 50 pounds per month compared to the 30 pounds per month produced by Frivoli. After innovating the new method of meatball production, Frivoli have an absolute advantage in producing meatballs because they are now capable of producing 60 pounds of meatballs per month compared to the Tivoli who can produce 50 pound of meatballs per month, (Beamer, 2012). Frivoli also have an absolute advantage in production of Spaghetti because they are capable of producing 40 pounds of Spaghetti compared to Tivoli’s productive capacity of 30 pounds of Spaghetti per month. Frivoli has comparative advantage in production of meatballs because it can produce 60 to the 50 pounds that can be produced per month by Tivoli. Frivoli also has the comparative advantage in production of Spaghetti because it can produce 40 pounds per month compared to 30 pounds that can be produced in a month by Tivoli.
The United States of America has a comparative advantage in production of aircraft because it exports aircraft worth $1 billion to China but only imports $19,000 from China. China on the other hand has comparative advantage in production of trousers, slacks and jeans because it exports trousers worth $83 million to United States but only imports trousers worth $8,000 from the United States, (Dempster, 2014). United States of America has absolute advantage in production of aircraft because it by far produces and exports aircraft to China than it imports from the same country whereas China has absolute advantage in production of trousers, slacks and jeans because it by far produces and export trousers, slacks and jeans to United States than it imports from the same country.
Macpherson Gwartney: (2013): Economics of Private and Public Choice. Cengage Learning
Gordon L. Brady: (2014): Government Failure: A Premier in Public Choice. Cato Institute
Glenn D. Beamer: (2012): Creative Politics: Taxes and Public Goods in a Federal System.
University of Michigan Press.
Anna M. Dempster: (2014): Risk and Uncertainty in the Art of the World. A&C Black Publisher.