Question

what is protectionism in economics? and what are its types??​

Answer 1

Answer:

Protectionism is the practice of following protectionist trade policies. A protectionist trade policy allows the government of a country to promote domestic producers, and thereby boost the domestic production of goods and services by imposing taxes or otherwise limiting foreign goods and services in the market.

Protectionism

Protectionist policies also allow the government to protect developing domestic industries from established foreign competitors.

Types of Protectionism

Protectionist policies come in different forms, including:

1. Tariffs

The taxes or duties imposed on imports are known as tariffs. Tariffs increase the price of imported goods in the domestic market, which, consequently, reduce the demand for them.

Consider the following example, which analyzes the UK market for US-made shoes. Due to the imposition of tariffs, the price for the product increases from GBP100 (P1) to GBP120 500 (P2). The demand for US-made shoes in the UK market decreases (from Q2 to Q4).

Tariffs - Chart

2. Quotas

Quotas are restrictions on the volume of imports for a particular good or service over a period of time. Quotas are known as “non-tariff trade barrier.” A constraint on the supply causes an increase in the prices of imported goods, reducing the demand in the domestic market.

3. Subsidies

Subsidies are negative taxes that are given to domestic producers by the government. They create a discrepancy between the price faced by consumers and the price faced by producers.

4. Standardization

The government of a country may require all foreign products to adhere to certain guidelines. For instance, the UK Government may demand that all imported shoes include a certain proportion of leather. Standardization measures tend to reduce foreign products in the market.

Answer 2

Answer:

Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government

regulations.

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