The imaginary nation of Washington prohibits the import of foreign-made pharmaceuticals. What effect does this have on the well-being of people in Washington who consume pharmaceuticals who benefits from this trade restriction?

 

Answer:

If Washingtonia prohibits the import of foreign-made pharmaceuticals, the people of Washingtonia are restricted to use drugs made only in Washingtonia. It ensures full utilization of the available resources within the country itself, every resource will be put to maximum use to make sure that the country can provide medicine for all different diseases in order to self-sustain itself. The idea of trade restriction also ensures that even the start -ups in the pharmaceuticals industry do not have to compete against the large firms from the other nations. This will help the industry and economy to achieve economic efficiency. The trade restrictions also help to curb the problems of dumping by the foreign pharmaceutical. The trade restriction also limits the availability of the medicine, the country may not be able to provide medicine for all the diseases by itself and hence, it may sometimes have adverse effects on the people of Washingtonia. If washingtonia does not has a comparative advantage in manufacturing the drugs it would also mean that the country is losing the opportunity cost of employing the resources in producing goods that they may not have comparative advantage in. The same factors of production can be employed in manufacturing goods that have higher advantage and ensure that the country benefits from the trade. The technology to make the drugs would also be difficult to acquire in Washingtonia due to trade restriction thus the price of the drugs manufactured in the country goes up and the people would have to pay more than they would have paid otherwise if free trade was allowed in the country.

The benefits from the trade restrictions can be Job Preservations for the people of Washingtonia, it would also ensure that the nation has security so that it can provide for all the medicines. It also saves the infant industry from the fierce competition of the world.