Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 21: Q.22 (page 522)

How does protectionism affect the price of the

protected good in the domestic market?

Short Answer

Expert verified

Protectionism affects the price of the protected good in the domestic market through increased prices.

Step by step solution

01

Step 1. Meaning 

Protectionismis a trade policy that allows the government of a country to impose tariffs on foreign goods and services to protect or boost the domestic production of goods and services.

02

Step 2. Explanation

When government restricts foreign goods' flow into the market, due to the tariffs the domestic market increases the prices of goods & consumer has limited choices there. Free trade increase the choices available to the consumers. Competiton also contributes to lower prices. But this competition is absent in case of protectionism.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What is the difference between a free trade association, a common market, and an economic union?

What might account for the dramatic increase in international trade over the past 50 years?

Do the jobs for workers in low-income countries that involve making products for export to high-income countries typically pay these workers more or less than their next-best alternative?

What is the general trend of trade barriers over recent decades: higher, lower, or about the same?

Microeconomic theory argues that it is economically rationale (and profitable) to sell additional output as long as the price covers the variable costs of production. How is this relevant to the determination of whether dumping has occurred?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free