4.1.4- protectionism

Question 1

What are reasons to restrict trade?

Answer 1

-prevent dumping
-prevent entry of harmful goods

Question 2

What is a tariff?

Answer 2

A tax imposed on imports to make them more expensive for domestic consumers to buy, therefore decreasing demand

Question 3

What are pros and cons to tariffs?

Answer 3

Pros-
-raise revenues for government
-it protects domestic businesses to sell more because they gain a price advantage

Dis-
-higher prices, decrease consumer spending
-other countries may impose their own traffis on imports

Question 4

What are import quotas?

Answer 4

an annual limit on the quantity of goods that can be sold in oversea market

Question 5

What are the pros and cons to import quotas?

Answer 5

Pros-
-protects the domestic market as it limits number of imports

Cons-
-consumers face a restricted choice of goods
-doesn’t raise revenue for government

Question 6

What is government legislation?

Answer 6

Its designed to protect consumer against dangerous/ unhealthy products. Imports have to meet strict regulations

Question 7

What are pros and cons to legislation?

Answer 7

Pros-
-prevents unethical firms from trading
-customers can trust the products that they are buying

Cons-
-can restrict choices for consumers
-a country can not protect all fakes from arriving in the country

Question 8

What are domestic subsidies?

Answer 8

They give finical support to domestic producers. Money is given to local producers to make their goods cheaper

Question 9

What are the pros and cons to domestic subsidies?

Answer 9

Pros-
-helps firms stimulate demand for their product
-help domestic businesses gain EOS

Dis-
-have to be paid from governments revenue
-may result in increase tax or lower spending in other areas
-firms may become reliant on subsidies