Protectionism

Question 1

Protectionism

Answer 1

deliberate restriction of free movement of goods and services

Question 2

Effect of world supply on domestic markets

Answer 2

Perfectly elastic global supply undercuts domestic price equilibrium
Demand increases
Reduced amount of demand supplied domestically

Question 3

Effect of tarrif

Answer 3

Shits up price of world supply
More demand domestically supplied
Less demand overall

Question 4

4 methods of protectionism

Answer 4

Tariffs and quotas
Subsidies
Administrative restrictions
Voluntary export restraint

Question 5

5 benefits of protectionism

Answer 5

Protects infant industry (Ethiopian clothing)
Increased domestic employment
To avoid unfair competition and dumping (Chinese steel)
Protect sunset industry
Protect strategic industry (rice + CAP)

Question 6

benefits of free tade

Answer 6

Possibility of retaliation (Russian bans of western agricultural products)
Promotes x-inefficiency and moral hazard (rice)
Reducing trade cost 1%= $40bn income

Question 7

3 causes of rice protectionism

Answer 7

50% of world eat every day
2012 Thailand hoarded rice to drive up prices
High staple price= regressive tax on poor

Question 8

issues with rice protectionism

Answer 8

Japanese milled rice tariff of 778% means 3x’s higher price than average due to inefficiency
Creation of shadow market
Rice prices have fallen 4% per year