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Flashcards in Protection Deck (6)
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1
Q

Protection

A

Any action taken by government designed to give domestic producers an official advantage over a foreign producer

2
Q

Goal of protection

A

Increase domestic production

Reduce import consumption

3
Q

Costs of protection

A
Wasted resources 
Non-protected industries 
Reduced exports 
Consumers pay to cover costs
Net welfare loss, loss outweighs gains
4
Q

What type of tax is a tariff?

A

Regressive, effects poor who rely on cheap overseas goods

5
Q

Why are tariffs inefficient?

A

Deadweight loss

6
Q

Subsidy

A

Form of protection that increases government expenditure, therefore reviewed regularly