Restriction on free trade 4.1.6

Question 1

What are the 3 restriction on free trade

Answer 1

Tariffs
Quotas
Subsidies

Question 2

Define a trade barrier

Answer 2

A restriction placed by the government on the import of a foreign good

Question 3

Define a tariff

Answer 3

Taxes paid on imports

Question 4

Define a Quota

Answer 4

A limit on the quantity of imports

Question 5

What are 2 drawbacks of a quota

Answer 5

No Government tax revenue
Severe shortages

Question 6

How do subsidies restrict free trade

Answer 6

Subsidies reduce the cost of production and increase the quantity supplied making domestic goods more competitive reducing the demand for imports

Question 7

What are 3 examples of Non-Tariff Barriers

Answer 7

Health and Safety Regulation
Environmental Regulation
Label Regulation

Question 8

What are the 4 reasons for restriction on free trade

Answer 8

Prevent Dumping
Protecting Domestic Employment
Protecting Infant Industries
Health and Safety

Question 9

What is dumping

Answer 9

When firms cut their prices below AVC in a foreign country so domestic firms cant compete

Question 10

Define Infant industries

Answer 10

Industries that dont benefit from ecnomies of scale