Question

"Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement:_______
a. Is essentially correct
b. Contains one error; the trade restraints do not increase the scarcity of foreign-produced good
c. Contains one error; domestic producers gain at the expense of foreign producers rather than domestic consumers
d. Contains two errors; trade restraints do not increase the domestic scarcity of product and neither do they harm domestic consumers

Answer 1

Answer:

a. Is essentially correct

Explanation:

When there is restrictions in tariffs and foreign trade, there will be a decrease in the availability of foreign products in the country where the restrictions is made i.e scarcity of the restricted foreign products will increase, This restriction will benefit the domestic producers of the foreign products at the expense of the domestic consumers. The consumers will have no choice other than to patronize the domestic producers. So the statement is essentially correct.

Answer 2

Answer: A

Explanation: Tariffs are imposed on foreign goods that are bought into a country. There are several reasons for the imposition of tariff such as revenue generation for the government, prevention of dumping, and protecting local industries.

When tariffs and other trade restrictions are placed on a product, it increases the domestic prices of such products. This is a blessing to domestic producers selling similar products because there will be an increase in demand for domestic products