Protectionism can maximize a country s national income a. To alter the terms of trade b. In response to unfair actions by other countries c. To protect infant industries d. Methods of Protection a.
Tariffs affect domestic and foreign producers, and domestic consumers.
Tariffs raise the price of imported goods. The idea behind imposing a tariff is that as the price of a good rises, domestic producers will be willing to supply a higher quantity and the quantity of imports will fall. Quotas affect domestic and foreign producers and domestic consumers. The idea behind a quota is that it restricts the quantity of imports which decreases the total quantity supplied in the market and raises the price of the good. The higher price encourages domestic producers to increase the quantity they are willing to supply.