Bu204 Macroeconomics Unit 2 Assignment

Renea Frymoyer BU204 01 September 29, 2012 ? Questions 1. A representative of the Ameri burn dress intentness recently make the following statement Workers in Asia frequently knead in sweatshop conditions earning solely pennies an hour. American workers are more successful and as a end omen earn nobleer compensation. In revise to preserve the self-worth of the American workplace, the regimen should enact legislation inhibition imports of low-wage Asiatic clothing. Answer the following a. Which parts of this quote are substantiative statements? Which parts are normative statements?Positive statements are claims that attempt to hound the cosmos as it is (Mankiw, 2011, p. 31). Normative statements are claims that attempt to prescribe how the world should be (Mankiw, 2011, p. 31). Positive statements * Workers in Asia often work in sweatshop conditions earning only pennies an hour. * American workers are more productive and as a result earn higher(prenominal) wages. Norma tive statements * In smart set to preserve the dignity of the American workplace, the government should enact legislation criminalise imports of low-wage Asian clothing. b.Would much(prenominal) a policy make some Americans wear off without fashioning any other Americans worse off? Explain who, and why. In order to preserve the dignity of the American workplace, the government should enact legislation banning imports of low-wage Asian clothing. Sweatshops once existed in the linked States. With the accumulation of uppercase, technology was develop and implemented workers became more educated, productive and their income increased and working conditions improved (Hendrickson, 2006). This is the parade of economic victimization.The explosion of sweatshops abroad has led to the decline of the apparel industry in the United States (Hendrickson, 2006). Economists are known to extradite conflicting views receivable to differences in values and perceptions (Mankiw, 2011, p. 3 4-35). Economist Josh Hendrickson believes it is in the best disport of Americans to import garments at lower address because it allows the United States to guidance capital and educated and skilled labor on ventures and enterprises that increase the banner of support and overall wealth of our country (2006).The United States has an absolute profit in producing apparel and the hazard cost is higher. Conversely, third-world countries with sweatshops have a comparative advantage and the opportunity cost is lower (Mankiw, 2011, p. 54-56). In regards to the preservation of dignity, sweatshops offer jobs where none existed before. Voluntary sweatshop workers are generally paid well in comparing to some a(prenominal) a(prenominal) in their country. The concern really should be for those who have jobs that cave in less with worse working conditions and for those who have no job (Hendrickson, 2006). The standard of living in the locality of sweatshops increases.United States wor kers are incited to become educated and work hard to obtain high paying jobs. The majority do not feel in competition with third-world sweatshop workers. c. Would low-wage Asian workers benefit from or be hurt by such a policy, and why? Without a doubt, low-wage Asian workers would not benefit from such a policy. First, due to the difference in economic development and the standard of living, we cannot compare wages in the United States with (sweatshop) wages in third-world countries. Asian sweatshops generally offer their workers higher wages and accep parry working conditions.Because the work is manual, hours are long and productivity is low. Realizing that some have jobs with lower wages and worse working conditions or no jobs at all (Hendrickson, 2006), voluntary sweatshop workers are glad to have their jobs and wassail a higher standard of living. 2. Referring to the equal situation in research 1, but instead of legislation banning the imports, assume that the government en acts a special tax on imported clothing that is so high that the selling price of the imports would be equal to the selling price of the same clothing made in America.This kind of tax is called a tariff and is enacted to protect domestic asseveraters of the same items that can be imported at much lower costs. Answer the following a. What would shoppers see when they shopped in Wal-Mart and the other big box stores that sell so many imported items? If the government enacted a special tax on imported clothing devising the selling price equal to the selling price of clothing made in the United States, shoppers would see imported items with much higher prices in discount stores.If the prices of clothing made in sweatshops and in the United States were comparative, shoppers would exact the trade-offs and opt to buy clothing made in the United States for higher quality, loyalty to United States workers, and the health of our economy (Mankiw, 2011, p. 4). Wal-Mart and big-box stores t hat sell so many imported clothing items would see a decrease in sales. Shoppers would discern to buy clothing at stores that sell clothing made in the United States. These stores would see an increase in sales. b.Would this tax policy have a better encumbrance, worse effect, or no different effect on American workers than the legislation banning the imports discussed in question 1? What kind of effect would the tax have on the Asian workers? contend between two countries can make each country better off (Mankiw, 2011, p. 10). Third-world countries with sweatshops have a comparative advantage in producing clothing at a lower opportunity cost (Mankiw, 2011, p. 54-56). Sweatshops play a vital role in economic development by bringing investment, technology, and the opportunity for workers to build skills and improve their standard of living.By importing clothing, the United States is allowed to focus capital and educated and skilled workers on more lucrative ventures and enterprise s aimed at advancing economic development and our standard of living (Hendrickson, 2006). Trade allows countries to mark in the activities they do best and to benefit from a multiplicity of goods and service at lower cost (Mankiw, 2011, p. 10). The tax would negate the economic development of third-world countries with sweatshops. Further, when Americans purchase imported goods and services, we are in effect, providing aid to poorer countries. . Atlantis is a small, single out island in the South Atlantic. The inhabitants grow potatoes and catch fresh slant. The accompanying table shows the maximum annual sidetrack combinations of potatoes and tilt that can be produced. Obviously, precondition their limited resources and available technology, as they use more of their resources for potato output signal, in that respect are fewer resources available for catching fish. Maximum annual output options Quantity of potatoes Quantity of fish (pounds) (pounds) A 1,000 0B 800 three h undred C 600 euchre D cd 600 E 200 650 F 0 675 a. test the Maximum annual output options table above and the resulting intersection contingency Frontier Graph below and answer parts b f. Production Possibility Frontier Graph b. Can Atlantis produce 500 pounds of fish and 800 pounds of potatoes? Explain. The economy of Atlantis can produce any combination of fish and potatoes on or inside the margin. Given the economys resources, points outside the frontier are not feasible (Mankiw, 2001, p. 26).Because point b is outside of the frontier, Atlantis does not have the resources to produce 500 pounds of fish and 800 pounds of potatoes. c. What is the opportunity cost of increase the annual output of potatoes from 600 to 800 pounds? If the annual output of potatoes is increased to 800 pounds, only 300 pounds of fish can be produced. Because the production possibilities frontier is bowed outward, the opportunity cost of potatoes is highest when the economy is many pounds of potatoes and fewer pounds of fish. It is steeper at point 800/300.When producing fewer pounds of potatoes and many pounds of fish, the frontier is coddle and the opportunity cost of pounds of fish is lower. It is flatter at point 600/500 (Mankiw, 2001, p. 26-27). Answer the opportunity cost is higher. d. What is the opportunity cost of increasing the annual output of potatoes from 200 to 400 pounds? If the annual output of potatoes is increased to 400 pounds, 600 pounds of fish can be produced. Because the production possibilities frontier is bowed outward, the opportunity cost of potatoes is highest when the economy is many pounds of potatoes and fewer pounds of fish.It is steeper at point 400/600. When producing fewer pounds of potatoes and many pounds of fish, the frontier is flatter and the opportunity cost of pounds of fish is lower. It is flatter at point 200/650 (Mankiw, 2001, p. 26-27). Answer the opportunity cost is lower. e. Can you exempt why the answers to parts c and d are no t the same? When Atlantis is utilize the majority of its resources to produce pounds of fish, the resources best suited for producing pounds of potatoes are organism used to produce pounds of fish.Because these workers likely are not good at producing pounds of fish, the economy will not have to forfeit producing many pounds of fish to increase producing more pounds of potatoes. The opportunity cost of pounds of potatoes is low and the frontier is flatter (Mankiw, 2001, p. 27-28). When Atlantis is using the majority of its resources to produce pounds of potatoes, the resources best suited for producing pounds of potatoes are already producing pounds of potatoes. Producing more pounds of potatoes means transferring some of the most skilled fishermen from producing pounds of fish to produce pounds of potatoes.Producing more pounds of potatoes will mean a significant loss in producing pounds of fish. The opportunity cost of producing pounds of potatoes is high and the frontier is stee per (Mankiw, 2001, p. 28). f. What does this imply close the slope of the production possibility frontier? The production possibilities frontier shows the trade-offs of producing fish and potatoes at a point in time. Due to a grade of circumstances, trade-offs can change. For example, the development and use of new fishing nets increases the pounds of fish that can be produced.Atlantis can now produce more pounds of fish compared to pounds of potatoes using the same resources. If Atlantis does not produce and pounds of fish, it can still produce 1,000 pounds of potatoes. 1 end point of the frontier stays the same (pounds of potatoes) but the lie of the production possibilities frontier shifts outward allowing economic growth (pounds of fish) (Mankiw, 2001, p. 28). The slope of the production possibilities frontier denotes the scale of the trade-off (Beggs, 2012). Beggs, Jodi. 2012). The production possibilities frontier. About. com Economics. Retrieved September 29, 2012, from h ttp// economic science. about. com/od/production-possibilities/ss/The-Production-Possibilities-Frontier_4. htm Hendrickson, Josh. (May 18, 2006). The economics of sweatshops. The Everyday Economist. Retrieved September 29, 2012, from http//everydayecon. wordpress. com/2006/05/18/the-economics-of-sweatshops/ Mankiw, N. Gregory. Principles of Macroeconomics. United States Cengage Learning, 2011. Print.