1e. Restrictions on free trade
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7 Terms
What is meant by: Quota?
A strict limit on the quantity of imports
What is meant by: Subsidy to Domestic Producer?
Grants given to domestic producers by the government in order to encourage supply and reduce price. This will decrease demand for imports.
What is meant by: Non-Tariff Barriers?
Restrict free trade by setting rules and regulations for imports to follow.
What is meant by: Examples of Non-Tariff Barriers?
Health and safety regulations, environmental regulations and labelling.
What is meant by: Reasons for Restrictions on Free Trade?
A country may impose restrictions on free trade to; prevent dumping, protect domestic jobs, protect infant industries and improve health and safety standards.
What is meant by: Dumping?
Dumping is where foreign firms aggressively cut their prices, below average variable costs, to force out domestic producers from a market.
What is meant by: Infant Industry?
New industries which do not benefit from economies of scale and can’t compete with larger industries from other countries.
