Suppose you are explaining the benefits of free trade and someone states, “I don’t understand all the principles of comparative advantage and gains from trade. I just know that if I buy something produced in America, I create a job for an American, and if I buy something produced in Brazil, I create a job for a Brazilian.” Do you agree with this statement? When the United States imports products for which it does not have a comparative advantage, does this mean there are fewer jobs in the United States? In the example in Section 9.3 with China and the United States producing and trading smartphones and wheat, when the United States imports smartphones from China, does the number of jobs in the United States decline? Briefly explain.

Data given in Section 9.3

Assume that in autarky, each country has 1,000 hours of labor available to produce the two goods, and each country produces the quantities of the two goods shown in Table 9.3. Because there is no trade, these quantities also represent consumption of the two goods in each country.

Data given in Table 9.3

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China United States Production and Consumption Smartphones 1,000 1,500 Wheat (bushels) 1,500 9,000