One of the reasons for trade protection is to raise government revenues. Using any trade protection diagram, highlight the area of government revenues as a result from trade protection.
Tariff diagram only (all other diagrams either don't show gov't revenue or leads to an expense for governments)
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15
Outline FOUR reasons why trade protection could be justified
protecting infant industries, national security, ensuring environmental standards, raising government revenue
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banana
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gold
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gift
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baam
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15
Explain why "reduced export competitiveness" might result from trade protection
When domestic producers are protected against foreign competition, there is less incentive to lower costs and to innovate.
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15
What steps can the government take to mitigate the consequences of free trade?
Tax the sectors of the economy which have an advantage and then use the money to retrain those in the sectors disadvantaged due to free trade
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boom
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star
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gift
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thief
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15
Define what is meant by dumping.
Dumping refers to the practice of firms selling products in foreign markets at below cost prices.
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15
What is the main argument of the mercantilism trade theory?
Mercantilists argued that a country must maximize production and reduce their reliance on imports in order to grow richer.
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20
Draw out a diagram to illustrate why free trade is beneficial to an economy.
