A2 Economics Unit 4 Aims and Objectives Aim U nderstand protectionism Objectives Define protectionism Explain methods of protectionism Analyse the effects of protectionism Evaluate the usefulness of protectionism ID: 375179
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Slide1
Protectionism
A2 EconomicsUnit 4Slide2
Aims and Objectives
Aim: U
nderstand protectionism
Objectives:
Define protectionismExplain methods of protectionismAnalyse the effects of protectionismEvaluate the usefulness of protectionismSlide3
Starter
There is no guarantee that gains of trade are equally distributed, and although restrictions on trade will probably reduce world welfare, individual countries may feel it is in their interest to do so……
Economist Article 2011Slide4
Definition
Protectionism:
Government
actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition.
restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition.Slide5
Starter
In groups decide on as many methods of protectionism as you can.Slide6Slide7
Techniques of Protectionism - Tariffs
Specific – tax at a fixed rate per unit.
Ad-Valorem – a tax which is a % of the price of the unit.
Taxes on imported goods.
Size of tariff depends on PED. Slide8
Techniques of Protectionism - Tariffs
Price
Qty
B
E
A
C
P
P+T
Domestic Demand
Domestic Supply
Price With Tariff
World Price
J
L
K
G
F
HSlide9
Techniques of Protectionism - Tariffs
World Price before tariff is 0P
Before tariff domestic demand was 0C and domestic suppliers were producing 0B.
Imports were BCSlide10
Techniques of Protectionism - Tariffs
Tariff imposed price rises to P+T
Domestic demand falls to 0A
Domestic output rises to 0E
Imports are now EA Slide11
Techniques of Protectionism - Tariffs
Domestic suppliers have gained P,P+T, H, J at the expense of consumers.
HFKL = revenue from tariff
Overall net loss is triangles – JHL & FKG – the tariff has reduced welfare as a whole.Slide12
Techniques of Protectionism - Embargoes
Prohibition of trade with a country to put pressure on its government to change policies.
Leads to smuggling and black markets
http://
www.bbc.co.uk/news/world-latin-america-16951854 Slide13
Techniques of Protectionism - Subsidies
Price
Qty
S
Before Subsidy
Government then subsidises to shift the supply curve downwards.
Consumer Surplus
Producer SurplusSlide14
Techniques of Protectionism - Subsidies
Price
Qty
S
S1
Consumer Surplus
Producer Surplus
After Subsidy
Supply curve shifts down, consumer and producer surplus increases.Slide15
Techniques of Protectionism - Quota
Limit on the number of imports allowed into a country.
Used to benefit producers but not consumers.Slide16
Techniques of Protectionism – Voluntary Export Restraints (VER)
One government persuades another to pressurise its exporters into limiting supplies into markets.
EU had one with Japanese car makers which reduced competition and lead to high consumer prices.Slide17
Is Protectionism a good thing?
http://news.bbc.co.uk/1/hi/programmes/hardtalk/9366475.stm
Create a spider diagram of the arguments for and against protectionism in preparation for
a debate/argument.