Question

Did all groups in society benefit from the repeal of the Corn Laws? If not, which groups were adversely affected, and which groups benefitted as a result of the repeal of the corn laws?

Why do you think a country has a comparative advantage in producing a good?

In the United States, how do you think the growth of trade over the last several decades has benefited and adversely affected workers?

Do you think there are particular groups of workers who have benefitted more or have been more adversely affected?

Answer 1

a)

• Corn laws imposed tariffs on imported grains
• It beneffited the famers of the country by keeping the grain price ( and hence their income) high .
• But it created food shortage and adversely affected the consumers with very high grain prices. Since grains are necessary goods it equally affected all sections of society irrespective of their income, hence the burden was highest on poor section of society.

b)

• Country has comparitive advantage in producing the good which can be produced with lower opportunity cost.

C)

• Export basket of US consist of mainly the goods which intensively use either capital or highly skilled labourers.
• According to Samuelson theory - wages of the factor which is used intensively, will increase.
• Thus wages of skilled labourers and price of capital will increase but wages of less skilled labourers will decrease