ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Tariffs leave the world market price of the goods unaffected; while raising their prices in the domestic market.

Detailed explanation-2: -A tariff raises the price of imports to home consumers, increases government revenue, and tends to increase the price for domestic producers of the import-competing commodity, thus providing an incentive for them to increase production and replace imports.

Detailed explanation-3: -Direct protection instruments affect commodities as they enter international trade either as imports or exports. The most common ones are tariffs, import and export quotas and export taxes and subsidies.

Detailed explanation-4: -Trade barriers are often enacted to protect industries and workers within a country. This is referred to as protectionism. For example, tariffs, quotas and embargoes make foreign goods more expensive and less available.

Detailed explanation-5: -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.