Do protectionist policies benefit producers, consumers, workers, or the government? Explain.
What will be an ideal response?
Protectionism in the form of tariffs or quotas reduces the total supply (domestic plus foreign) of the good. As a consequence, the price will rise. This change has a number of profound effects on all groups. Some consumers will not be able to purchase the product at the higher price. Those consumers that still purchase the good will pay a higher price. So consumers are hurt by protectionist legislation. Domestic producers will receive more revenue and workers in those industries may benefit from the improved revenue for business because it may mean fewer layoffs or higher wages. Thus, domestic producers and workers in those industries benefit, which explains why their organizations often lobby hard for the protectionist legislation. Businesses and workers in industries that import or service foreign products are hurt by tariffs and quotas. Foreign producers receive less revenue than would be the case with free trade. The government will benefit from a tariff, but will receive no revenue from a quota. Overall, the gains for protected industries and workers come at the expense of the whole economy.
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An exchange rate system in which governments try to keep currency values from fluctuating against one another is a fixed exchange rate system.
Answer the following statement true (T) or false (F)
Which of the following most resembles a case of statistical discrimination?
A) Judy only hires military veterans because she believes it is her patriotic duty to do so. B) Due to the consequences of his behavior as a teenager, Marcel now hates police officers and refuses to hire any retired cops as security guards for his legal marijuana co-op in Denver. C) Barney thinks that people who attended public high schools have better social skills than people who were home schooled, so he tends to hire those with public school educations as telemarketers. D) Penelope believes her customers would be frightened away by salespeople with tattoos, so she only hires people with no visible body art.
The term Original Sin by two economists Barry Eichengreen and Ricardo Hausmann is used to describe what?
A) low-income economy B) developing countries' inability to borrow in their own currencies C) a sin that is part of the Ten Commandments D) borrows not able to receive loans E) not diversifying economies portfolios
A dominant strategy is: a. one that maximizes the social welfare
b. one that maximizes profit. c. one that maximizes a player's welfare, regardless of the behavior of a competitor. d. one that maximizes a player's welfare, given the actions of a competitor.