Reference no: EM133339828

Question: While the US, just like any other country, might be very good in producing a good or a service, that good/service might not have a comparative advantage in the global market, and thus, might not be competitive enough for trade. While the US's agriculture industry produces at a large scale and uses high tech methods in production, it actually doesn't have comparative advantage relative to other countries whose agriculture products rely on manual cheap labor. Remember, what matters the most in trade is the actual price of a commodity in one country relative to its price in the local market.

In the real world, countries' comparative advantages are "distorted" by trade barriers. Tariffs (taxes imposed on imported goods that are added to the final price consumer end up paying) and quotas (a quantity limit on the commodity that could be imported, and thus limiting the supply of that commodity in the local market), leading to higher prices for both the imported and locally produced commodity (same commodity).

The US has extensive trade barriers on agriculture products, and the agriculture industry in the US is considered a "protected industry". Discuss the impact of trade barriers on the well-being of consumers, producers, and the labor force in the local economy. Are trade barriers beneficial to the local economy?