ECONOMICS
BARRIERS TO TRADE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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to raise the price of imported goods and encourage people to buy local
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to raise the price of imported goods to help other countries make more money
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to be mean!
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None of the above
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Detailed explanation-1: -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-2: -Countries use quotas in international trade to help regulate the volume of trade between them and other countries. Countries sometimes impose quotas on specific products to reduce imports and increase domestic production. In theory, quotas boost domestic production by restricting foreign competition.
Detailed explanation-3: -Here’s why. First, for industries seeking protection, quotas arguably provide greater certainty than tariffs that imports will be limited. Under tariffs, if importers can bear the costs, or exporters can reduce their prices, imports will continue to flow in and competition will remain high.