Which of the Following Is Not True About Protectionism

question 62

Multiple Choice

Which of the following is not true about protectionism?

• A) It reduces competition.
• B) It may cause friction between nations.
• C) It increases prices to consumers.
• D) Tariffs and quotas protect domestic firms and jobs.
• E) It is a revenue source for the provincial governments in Canada.

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Definitions:

Brand Loyalty

The tendency of consumers to continuously purchase products from the same brand instead of switching to competitors.

Entry Barriers

Obstacles that make it difficult for new competitors to enter a market or industry.

Substitute Products

Products that can serve as replacements for one another; when the price of one increases, the demand for the substitute is likely to increase.

Herfindahl Index

A measure of market concentration used to evaluate the level of competition within an industry, calculated by summing the squares of the market shares of all firms in the industry.