ECONOMICS
BARRIERS TO TRADE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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So that customers buy things produced domestically
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To hurt another nation economically in times of war
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Tariffs and quotas often protest acts of terrorism
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To make prices end in zeros after exchange rates
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Detailed explanation-1: -Governments impose tariffs to raise revenue, protect domestic industries, or exert political leverage over another country. Tariffs often result in unwanted side effects, such as higher consumer prices.
Detailed explanation-2: -The main objective of tariffs and quotas is to protect the domestic industries and jobs from high foreign competition because most commodities imported into countries are usually cheaper because of their low production costs.
Detailed explanation-3: -Import quotas offer another means of protectionism. These quotas set an absolute limit on the amount of certain goods that can be imported into a country and tend to be more effective than protective tariffs, which do not always dissuade consumers who are willing to pay a higher price for an imported good.
Detailed explanation-4: -Tariffs provide a country with extra revenue and they offer protection to domestic producers by causing imported items to become more expensive. Quotas are more effective in restricting trade than tariffs, especially if domestic demand for something is not price-sensitive.
Detailed explanation-5: -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.