Protectionism

Overview

Tariffs, import quotas, government legislation and other non-tariff barriers, domestic subsidies in their different forms, and how tariffs and quotas differ in the way they restrict trade and whether they raise revenue.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   Define a tariff in the context of international trade.

   Model answer

   A tax imposed by a government on imported goods, raising their price to protect domestic producers from foreign competition.

2. 2

   How do tariffs affect the competitiveness of domestically produced goods?

   Model answer

   Tariffs increase the price of imported goods for consumers, making domestically produced goods relatively more competitive by comparison.

3. 3

   What would happen to the price of an imported good if the government imposed a tariff on it?

   Model answer

   The price would increase, as the tariff adds a tax to the cost of the imported good.

4. 4

   Besides protecting domestic producers, what other benefit do tariffs provide to the government?

   Model answer

   Tariffs generate revenue for the government imposing them.

5. 5

   What is an import quota?

   Model answer

   A physical limit on the quantity of a specific good that can be imported into a country during a given time period.

6. 6

   Explain how import quotas protect domestic producers.

   Model answer

   Import quotas restrict the supply of foreign goods, which can raise prices and protect domestic producers by limiting competition from imports.

Other ways to work this

The same content, four other ways.

What is inside Levo

Six ways to work the same material.