Problems

online retailer like Amazon.com support such a measure? 20 . To ensure safety and efficacy, the Food and Drug Administration regulates the medicines that pharmacies are allowed to sell in the United States. Sometimes this means a company must test a drug for years before it can reach the market. We can easily identify the winners in this system as those who are protected from unsafe drugs that might otherwise harm them. Who are the more anonymous losers who do not benefit from strict medical regulations? 21 . How is it possible to bear a cost without realizing it? What are some examples of policies that affect people in ways of which they may not even be aware? 22 . Is pork-barrel spending always a bad thing? Can you think of some examples of pork-barrel projects, perhaps from your own district, that have had positive results? 23 . The United States currently uses a voting system called “first past the post” in elections, meaning that the candidate with the most votes wins. What are some of the problems with a “first past the post” system? 24 . What are some alternatives to a “first past the post” system that might reduce the problem of voting cycles? 25 . AT&T spent some $10 million dollars lobbying Congress to block entry of competitors into the telephone market in 1978. Why do you think it efforts failed? 26 . Occupy Wall Street was a national (and later global) organized protest against the greed, bank profits, and financial corruption that led to the 2008–2009 recession. The group popularized slogans like “We are the 99%,” meaning it represented the majority against the wealth of the top 1%. Does the fact that the protests had little to no effect on legislative changes support or contradict the chapter?

Problems

27 . Say that the government is considering a ban on smoking in restaurants in Tobaccoville. There are 1 million people living there, and each would benefit by $200 from this smoking ban. However, there are two large tobacco companies in Tobaccoville and the ban would cost them $5 million each. What are the proposed policy's total costs and benefits? Do you think it will pass?

FIGURE 19.1Apple or Samsung iPhone? While the iPhone is readily recognized as an Apple product, many versions (including recently released offerings) have key components made by rival phone-maker, Samsung. In international trade, there are often “conflicts” like this as each country or company focuses on what it does best. (Credit: modification of “iPhone 4's Retina Display v.s. iPhone 3G” by Yutaka Tsutano/Flickr Creative Commons, CC BY 2.0)

In this chapter, you will learn about:

• Absolute and Comparative Advantage
• What Happens When a Country Has an Absolute Advantage in All Goods
• Intra-industry Trade between Similar Economies
• The Benefits of Reducing Barriers to International Trade

BRING IT HOME Just Whose iPhone Is It? The iPhone is a global product. Apple does not manufacture the iPhone components, nor does it assemble them. The assembly is done by Foxconn Corporation, a Taiwanese company, at its factories in China and India. But, Samsung, the electronics firm and competitor to Apple, actually supplies many of the parts that make up an iPhone. In earlier models, Samsung parts made up as much as 26% of the total costs of production. And in more recent versions, Samsung manufactures the displays and cameras. In some ways, then, Samsung is both the biggest