1e. Restrictions on free trade

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.