Protection Flashcards
1
Q
Protection
A
Any action taken by government designed to give domestic producers an official advantage over a foreign producer
2
Q
Goal of protection
A
Increase domestic production
Reduce import consumption
3
Q
Costs of protection
A
Wasted resources Non-protected industries Reduced exports Consumers pay to cover costs Net welfare loss, loss outweighs gains
4
Q
What type of tax is a tariff?
A
Regressive, effects poor who rely on cheap overseas goods
5
Q
Why are tariffs inefficient?
A
Deadweight loss
6
Q
Subsidy
A
Form of protection that increases government expenditure, therefore reviewed regularly
