Question

International trade is a zero-sum game? why

When a nation imports materials and other inputs for production duty-free, its tariff policy generally results in a nominal tariff rate less than the effective tariff rate. why

The United States (US) imposes a tariff on imported stereos. This tariff would benefit US consumers looking to purchase a stereo? why

Answer 1

1st question answered:

Economics has evoloved as a branch of study. There were various perspectives about different topics in economics. For example- International trade.

Mercantalists during 15th till mid 17th. (till Adam Smith wrote The wealth of nations in 1776) had a belied that international trade is only advantageous to a country that exports and always has disadvantages for importers.

Bullion or precious metal goes out from importing country and exporting country gets richer and richer and importing country gets poorer and poorer.

This is azero sum game as there is only one party that is better off.

However, when Adam smith proposed that international trade is not a zero sum game. He proposed that if a country focuses on a good in which it has absolutre advantage and then if they trade in between each other than both focusing on both goods, gain more for more. Hence trade becomes a positive sum game.

Hence evolution from zero sum game to positive sum game is based on numerical evidences.