8. Lobbying for or against trade restrictions Trade restrictions affect the over

Question

8. Lobbying for or against trade restrictions Trade restrictions affect the overall welfare of an economy, since they change the price consumers pay for a good and the quantity produced and consumed domestically. the and hurt domestic , Trade restrictions, such as quotas, usually benefit domestic domestic price of a good. producers True or False: Consumers find it difficult to exert the political consumers eded to remove trade restrictions, because the costs to consumers are very small and widely dispersed, which makes it difficult for cornsumers t organize O True O False

Explanation / Answer

Trade restrictions, generally benefit PRODUCERS and hurt domestic CONSUMERS, since they INCREASE the domestic price of a good.
This happens because trade restrictions are generally put to save the domestic producers from international competition so that they can flourish, this is needed when global prices for a good are lesser. Thus when such restrictions are put, the prices in domestic market are higher which is beneficial for the producer but not the consumer.

TRUE
Consumers are plenty in no. So there individual capacity is less, whereas producers are comparitively less in no. And more powerful due to the size of their business, also it is easier for all producers to unite to pressurize the govt to impose trade restrictions as all producers have great stake in the market and this decision may affect them a lot.

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