Protectionism

1 What is not a reason for a government to impose an import tariff?

• A to protect a strategic industry

• B to raise revenue

• C to protect a declining industry

• D to reduce inflation

2 A government places a tariff on a product. The diagram shows the effect of this on the home market. What is the reduction in the volume of imports?

• A 14 000

• B 24 000

• C 25 000

• D 35 000

3 A government removes a tariff on imported food. What is most likely to increase in the short term?

• A consumer surplus experienced by domestic consumers

• B output of domestic food producers

• C tariffs imposed by foreign governments on imports of food from the country

• D the quantity foreign producers sell on their home markets

4 The Argentinian government imposes a quota on imports of cars from Japan. Which strategy would help a Japanese car firm to sell more cars to Argentinian consumers?

• A cutting the price of the cars it exports to Argentina

• B offering three years of free car insurance to Argentinian consumers

• C producing a new improved model to sell to Argentina

• D setting up a new car manufacturing factory in Argentina

5 What is an argument in favour of a government imposing import tariffs?

• A It will create a greater variety of products available for domestic consumers.

• B It will encourage foreign firms to reduce the prices of their exports.

• C It will reduce the market power of domestic producers.

• D It will stimulate an increase in the output of sunset industries.

6 Which tool of protection would be the least effective if demand for imports is price inelastic?

• A embargo

• B exchange control

• C quota

• D tariff

7 A government imposes an export tariff on food and an import tariff on cars. What are the likely effects in the short term on the price of food and the price of cars in the country?

• A

• B

• C

• D

8 What is a valid argument for the imposition of a quota on the import of a product from another country?

• A The other country has lower health and safety standards.

• B The other country has removed subsidies given to its producers of the product.

• C The other country’s producers have an absolute advantage in producing the product.

• D The other country’s producers are selling the product at above cost price.

9 Why may some firms oppose the imposition of import tariffs?

• A They may decrease demand for their products.

• B They may decrease the terms of trade.

• C They may increase their costs of production.

• D They may increase the tax revenue the country’s government receives.

10 What is a possible disadvantage of protectionism?

• A It can give time for infant industries to grow.

• B It can prevent dumping.

• C It can reduce competitive pressure on domestic firms.

• D It can stop the importation of demerit goods.