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Identify whether each scenario describes a drawback or an advantage of trade regulation.

1. Melanie owns a juice and soda company. Her country imposes tariffs on imported soft drinks. Melanie and her employees feel secure because they aren't threatened by heavy competition from foreign beverages.
- Benefit of trade regulations

2. Chad owns a shoe factory. For 15 years, his country has blocked virtually all foreign shoes from entering the domestic market. Chad does not feel the need to innovate and create new styles of shoes to offer variety to consumers.
- Drawback of trade regulations

3. Ravi has a unique vision for the future of smartphones. He believes his design can propel his nation to the top tier of smartphone exporters. But he holds off on starting a manufacturing company because he thinks foreign competition has created an unfavorable climate for new companies. Ravi gets lucky when his country enacts subsidies and protectionist policies for its high-tech industry. Soon, Ravi starts his own company and registers a patent for his design. His product is a hit around the world.
- Benefit of trade regulations

4. Sharon had saved enough money to buy a particular imported car, but her country recently imposed heavy tariffs on automobile imports. As a result, the price of her dream car shot up, and she may have to consider buying a different car.
- Drawback of trade regulations



Answer :

GinnyAnswer

Final answer:

Trade regulations can provide security and reduce competition, but they can also lead to complacency and lack of innovation in industries. Subsidies and protectionist policies can benefit innovative ventures, yet heavy tariffs can result in price increases and limit consumer choices.


Explanation:

Trade regulations can have both advantages and disadvantages. In the case of Melanie and her juice and soda company facing tariffs on imported soft drinks, the lack of foreign competition provides security and less competition, which can be seen as an advantage of trade regulation. On the other hand, Chad's shoe factory being shielded from foreign competition for years resulted in complacency and lack of innovation, showcasing a drawback of trade regulations.

Ravi's delayed start in the smartphone industry due to foreign competition fears, but eventually thriving after subsidies and protectionist policies were enacted shows how such policies can at times benefit innovative ventures. Conversely, Sharon facing price hikes on imported cars due to heavy tariffs demonstrates how trade restrictions can hinder consumer choices and affordability.


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