ECONOMICS
BARRIERS TO TRADE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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by reducing the cost of domestic resources
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by improving the efficiency of domestic production
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by helping domestic producers access foreign markets
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by increasing the price of foreign competitors’ products
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Detailed explanation-1: -The taxes or duties imposed on imports are known as tariffs. Tariffs increase the price of imported goods in the domestic market, which, consequently, reduces the demand for them.
Detailed explanation-2: -Obviously, a tariff also generates revenues for the government of the importing country (revenue function). Tariffs therefore benefit the government and producers of the importing country in the form of tax revenues and producer surpluses at the expense of its consumers in the form of higher prices.
Detailed explanation-3: -Tariffs are a boon to domestic producers who now face reduced competition in their home market. The reduced competition causes prices to rise. The sales of domestic producers should also rise, all else being equal.
Detailed explanation-4: -Government-levied tariffs are the chief protectionist measures. They raise the price of imported articles, making them more expensive (and therefore less attractive) than domestic products. Protective tariffs have historically been employed to stimulate industries in countries beset by recession or depression.
Detailed explanation-5: -Trade protectionism is a policy that protects domestic industries from unfair foreign competition. The four primary tools used in trade protectionism are tariffs, subsidies, quotas, and currency manipulation.