4.1.6 Restrictions on free trade Flashcards
contains reasons and types of restrictions, analysis of import tariff
1
Q
What are the reasons for restrictions on free trade?
A
- infant industry
- protectionism
- unfair competition
- job protection
- dumping
2
Q
What is meant by ‘infant industry’? How does it affect free trade?
A
- business that has just been established; meaning it needs to build a consumer base + reputation
- needs to cover lots of sunk costs; higher AC
- tends to be ineffective as firms grow to be inefficient + gov. tends to pick ‘winners’.
3
Q
Why is protectionism important?
A
- prevents firms and consumers from becoming too reliant on certain goods and services.
4
Q
A
