Question

Suppose that Edison, an economist from a university in Arizona, and Hilary, an economist from a school of industrial relations, are arguing over government bailouts. The following dialogue shows an excerpt from their debate: Hilary: Thanks to recent financial crises, the concept of bailouts is a hot topic for debate among everyone these days. Edison: Indeed, it's gotten crazy! A government bailout of severely distressed financial firms is unnecessary because free markets will properly price assets. Hilary: I don't know about that. Without a bailout of severely distressed financial firms, the economy will experience a deep recession. The disagreement between these economists is most likely due todifferences in values . Despite their differences, with which proposition are two economists chosen at random most likely to agree? Minimum wage laws do more to harm low-skilled workers than help them. Lawyers make up an excessive percentage of elected officials. Tariffs and import quotas generally reduce economic welfare.

Answer 1

Answer:

Tariffs and import quotas generally reduce economic welfare.

Explanation:

The vast majority of economists (over 90% according to the University of Chicago) agree that tariffs and import quotas generally reduce economic welfare. This is perhaps the normative statement in which economists agree the most.

The reason why is because tariffs and import quotas only benefit a small fraction of domestic producers, to the dismay of a larger number of consumers who end up having to pay higher prices for consumer goods.