The Argument That Foreign Trade Should Be Restricted to Protect

question 86

Multiple Choice

The argument that foreign trade should be restricted to protect domestic employment and output is based on the idea that:

• A) consumers are willing to pay higher prices for domestic goods.
• B) producers will not exploit reduced foreign competition by charging higher prices.
• C) foreign companies are more costly to deal with than domestic companies.
• D) sales of imports come at the expense of domestic goods and jobs.

---

Definitions:

Price Ceiling

A legally imposed maximum price on goods or services, preventing prices from rising above a certain level.

Shortage/Surplus

A situation where the quantity of a good demanded exceeds the quantity supplied (shortage) or the quantity supplied exceeds the quantity demanded (surplus).

Price Ceiling

A cap set by the government on the maximum price that can be asked for a good, service, or commodity.

Shortage/Surplus

An economic condition where the quantity demanded is greater than (shortage) or less than (surplus) the quantity supplied at the market price.