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Chapter 9: Problem 9

The members of labor union X produce cars in the United States for sale in the United States only. The U.S. Congress is contemplating imposing a quota, restricting the number of foreign produced cars that can be sold in the country. Are the members of labor union X likely to support or not support this action? Explain your answer.

Short Answer

Expert verified
Yes, the members of labor union X are likely to support the imposition of a quota on foreign-produced cars. This is because the quota would reduce competition from foreign manufacturers, possibly leading to increased demand for their cars, higher prices, and greater job security for union members.

Step by step solution

01

Understanding Quotas

A quota is a government-imposed trade restriction that limits the number or value of certain goods that can be imported into a country during a specific period. Quotas are used to protect domestic industries and jobs from foreign competition.
02

Analyzing the situation

In this situation, if the U.S. Congress imposes a quota on foreign cars, that would lower the number of imported cars sold in the U.S. Hence, there will be less competition for the cars produced by labor union X.
03

Making a prediction

Given the anticipation of reduced competition, it can be inferred that the labor union X might support the quota. The imposition of a quota could result in increased demand for their product, higher prices, and potentially, more jobs and better wages for the union members.

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