4.1.6 Restrictions On Free Trade Flashcards
1
Q
Explain the infant industry argument
A
- Protecting emerging economies until they have achieved economics of scale
- Protecting them from international competition
2
Q
Explain job protection
A
- Protectionism can slow demand down for imports, therefore higher profits for domestic firms.
- This will allow them to maintain employment levels.
3
Q
Evaluate job protection
A
- This may come at the cost of higher price and lower choice for consumers.
4
Q
Explain dumping
A
- Where international goods are sold at prices which are lower than cost of production.
- May occur when foreign firms cannot find a market for their goods.
5
Q
What is the definition of a tariff
A
- Tax on imported good which has the effect of raising domestic price on imports.
6
Q
What does a tariff aim to do?
A
- Increase domestic production and reduce demand for foreign goods and services
7
Q
What is a quota
A
A limit on the quantity of imports into a country
8
Q
What do quotas aim to do?
A
- Limit imports
- Reduce domestic consumption
9
Q
Explain subsidies to domestic producers
A
- A grant given to domestic producers to lower costs of production and increase international competitiveness
10
Q
What effects do subsidies have?
A
- Increasing exports
- Reducing imports
11
Q
A
