Question

Tariffs and import quotas promote economic inefficiency and reduce the real income of a nation. Economic analysis suggests that nations can gain by eliminating trade restrictions. Which of the following best explains why, despite the resulting inefficiencies, trade restrictions exist in the real world?

a) Fear of foreign competition

b) National security concerns

c) Political considerations

d) Desire for economic self-sufficiency

Answer 1

Political considerations are a major reason why trade restrictions exist despite the resulting inefficiencies.

Step-by-step explanation:

The best explanation for why trade restrictions exist in the real world despite the resulting inefficiencies is political considerations. Political factors often play a significant role in trade policy decisions, as governments must balance the interests of various stakeholders, including domestic industries, labor unions, and consumer groups. Trade restrictions can be implemented to protect domestic industries from foreign competition, appeal to certain voter groups, or address national security concerns.