Part 1: Answer the following questions. Use formulas and show calculations as well as final answers.
a. Does the United States have a comparative advantage in wingdings? Explain.
b. Discuss the effect of the tariff on the number of imports.
c. How did the imposition of the tariff change consumer surplus?
d. How did the imposition of the tariff change producer surplus?
e. What is the overall result of the tariff in terms of welfare?
A. The US does not have a comparative advantage in wingdings because the world price is below their equilibrium domestic price of $10. It is cheaper to import wingdings than it is to produce them. If the US had a comparative advantage in wingdings, we would export them. Comparative advantage is
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For most of human prehistory and history, manual labor and its close cousin, animal labor, have been the primary ways that physical work has been accomplished. Mechanization and automation, which reduce the need for human and animal labor in production, have existed for centuries, but it was only starting in the 19th century that they began to significantly expand and to change human culture. To be implemented, they require that sufficient technology exist and that its capital costs be justified by the amount of future wages that they will obviate. Although nearly any work can potentially have skill and intelligence applied to it, many jobs that mostly comprise manual labor—such as fruit and vegetable picking, manual materials handling (for example, shelf stocking), manual digging, or manual assembly of parts—often may be done successfully (if not masterfully) by unskilled or semiskilled workers. Thus there is a partial but significant correlation between manual labor and unskilled or semiskilled workers. Based on economic and social conflict of interest, people may often distort that partial correlation into an exaggeration that equates manual labor with lack of skill; with lack of any potential to apply skill (to a task) or to develop skill (in a worker); and with low social class. Throughout human existence the latter has involved a spectrum of variants, from slavery (with