Some people assert that protection from foreign competition ...

[rmenurse]

Some people assert that protection from foreign competition prevents rich countries from exploiting developing countries. What is this argument in more detail and what is its flaw?
 
  What will be an ideal response?

Question 2

If firms in an industry make output decisions that are partially based on the price and output decisions of their competitors, then these firms are in ________ market have ________ with the other firms in the market.
 
  A) an oligopoly; interdependence
  B) an oligopoly; no interdependence
  C) an oligopoly or monopolistically competitive; interdependence
  D) a monopolistically competitive; no interdependence

[itsakadoozi]

Answer to Question 1

The argument claims that rich nations will exploit poor nations by importing goods from the poor nations and that the workers in the poor nations are paid slave wages to produce these goods. This argument has a truly fatal flaw. Free trade increases the demand for the goods produced by workers in developing countries. Thus in order to produce more of these goods, the firms must hire more workers. Hence the demand for the labor used to produce the goods increases, which means that the wage rates paid the workers in the developing countries rises. Thus rather than exploiting the workers in the poor nations, free international trade is one of their few hopes for better lives

Answer to Question 2

A