Many economists discourage restrictions on trade, emphasizing the costs associated with tariffs and quotas. however, the u. s. government still receives pressure from some to erect trade barriers, and some trade barriers are still in place. why would policymakers (such as those in congress) understand the potential benefits from trade yet support trade restrictions?
a. the benefits of trade restrictions are reaped by all industries.
b. it is difficult to identify the number of jobs lost to foreign competition.
c. although trade restrictions have costs, their net benefits are always positive.
d. the costs of trade restrictions per consumer are small.
e. foreign competition from free trade does not create new jobs.

Fanning company is considering the addition of a new product to its cosmetics line. the company has three distinctly different options: a skin cream, a bath oil, or a hair coloring gel. relevant information and budgeted annual income statements for each of the products follow. skin cream bath oil color gel budgeted sales in units (a) 110,000 190,000 70,000 expected sales price (b) $8 $4 $11 variable costs per unit (c) $2 $2 $7 income statements sales revenue (a × b) $880,000 $760,000 $770,000 variable costs (a × c) (220,000) (380,000) (490,000) contribution margin 660,000 380,000 280,000 fixed costs (432,000) (240,000) (76,000) net income $228,000 $140,000 $204,000 required: (a) determine the margin of safety as a percentage for each product. (b) prepare revised income statements for each product, assuming a 20 percent increase in the budgeted sales volume. (c) for each product, determine the percentage change in net income that results from the 20 percent increase in sales. (d) assuming that management is pessimistic and risk averse, which product should the company add to its cosmetics line? (e) assuming that management is optimistic and risk aggressive, which product should the company add to its cosmetics line?