Ch 24 - Free Trade and Protectionism

Comparative advantage

________ is distorted leading to inefficient use of world resources.

Government restrictions

________ are placed on the imports of foreign competitors (tariffs, quotas and subsidies)

Subsidy

________: an amount of money paid by the government to a form per unit of output.

→ National

________ embargoes: marketing campaigns to encourage people to buy domestic goods.

**Free trade**

international trade (imports and exports) without government restrictions

**Protectionism** 

Protection of domestic industries against foreign competition 

Arguments for protectionism

* Protecting domestic employment 
* Protecting the economy from low cost labour 
* Protecting the economy from low cost labour 
* Protecting an infant (sunrise) industry 

**Tariff**

a tax that is charged on an imported good. Any tax will cause suppliers to supply less

**Subsidy**

an amount of money paid by the government to a form per unit of output 

**Quotas**

physical limit on the number of value of goods that can be imported to a country

**Administrative barriers**

When goods are imported there are always administrative processes

**Embargoes**

complete ban on imports 

**Health, safety, and environmental standards**

When restrictions are put on the type of goods that can sold in the domestic market 

Free trade

international trade (imports and exports) without government restrictions

Tariff

a tax that is charged on an imported good

Subsidy

an amount of money paid by the government to a form per unit of output

Quotas

physical limit on the number of value of goods that can be imported to a country

→ Embargoes

complete ban on imports

→ National embargoes

marketing campaigns to encourage people to buy domestic goods