ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Trade barriers increase the cost to the company since they have to depend on domestic products for raw materials due to restrictions on importing cheap foreign raw materials. It directly impacts the final price of the goods and services, discouraging customers from buying them in the local market.

Detailed explanation-2: -The effects of trade barriers can obstruct free trade, favor rich countries, limit choice of products, raise prices, lower net income, reduce employment, and lower economic output. The law is most commonly used as a trade barrier due to the significant control the government has over it.

Detailed explanation-3: -Trade barriers are legal measures put into place primarily to protect a nation’s home economy. They typically reduce the quantity of goods and services that can be imported.

Detailed explanation-4: -Trade barriers, such as taxes on food imports or subsidies for farmers in developed economies, lead to overproduction and dumping on world markets, thus lowering prices and hurting poor-country farmers.

Detailed explanation-5: -The most common barrier to trade is a tariff–a tax on imports. Tariffs raise the price of imported goods relative to domestic goods (good produced at home). Another common barrier to trade is a government subsidy to a particular domestic industry. Subsidies make those goods cheaper to produce than in foreign markets.