Many Economists Criticize Protectionism Because It Causes Losses to Consumers

question 101

Multiple Choice

Many economists criticize protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products.Why, then, do some people support protectionism?

• A)The criticisms of economists are based on theory. In fact, protectionism increases consumer and producer surplus as well as employment.
• B)Supporters of protectionism in high-income countries believe that wages will fall as a result of competition with firms from developing countries.
• C)Supporters of protectionism believe free trade will cause their countries to lose their comparative advantage.
• D)Supporters of protectionism believe that free trade will lead to inflation.

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, including utilities, maintenance, and management salaries not directly tied to production.

Work in Process

Materials and products that are partially completed but not yet finished goods in the manufacturing process.

Finished Goods Inventory

The stock of completed products that are ready to be sold by a manufacturing company.

Vertical Analysis

An analysis that compares each item in a current statement with a total or key amount within the same statement.