Question

The opportunity cost of using protectionism to save jobs in one industry is often lost jobs in other industries. Saving jobs through protectionism means a loss of efficiency because the economy no longer specializes in Which of these statements is its comparative advantage. Saving a job through protectionism often costs more than the worker's salary. All of the above are true.

Answer 1

the answer is (d) all of the statements are true

I is true as for instance if US wants to protect the steel industry and uses protectionist measures that increase the price of steel. This increases employment in the US steel sector but the higher price may lead to losses fo =r some of the downstream firms which use steel as an input in the production. They may layoff some workers as a result.

II is true as often the cost of protection in the form of higher prices and lost efficiency is more than the wages paid to the workers.

III is true as it causes a shift in the production schedules and workers might be shifted from the sector that had a comparative advantage to the sector that does not have a comparative advantage and the economy will no longer specialize.