Page 177 - The Principle of Economics

APPLICATION: INTERNATIONAL TRADE
If you check the labels on the clothes you are now wearing, you will probably find that some of your clothes were made in another country. A century ago the textiles and clothing industry was a major part of the U.S. economy, but that is no longer the case. Faced with foreign competitors that could produce quality goods at low cost, many U.S. firms found it increasingly difficult to produce and sell textiles and clothing at a profit. As a result, they laid off their workers and shut down their fac- tories. Today, much of the textiles and clothing that Americans consume are im- ported from abroad.
The story of the textiles industry raises important questions for economic pol- icy: How does international trade affect economic well-being? Who gains and who loses from free trade among countries, and how do the gains compare to the losses?
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IN THIS CHAPTER YOU WILL . . .
Consider what determines whether a country imports or exports a good
Examine who wins and who loses from international trade
Learn that the gains to winners from international trade exceed the losses to losers
Analyze the welfare effects of tariffs and import quotas
Examine the arguments people use to advocate trade restrictions