Question

Refer to the Article Summary. Assume countries initially enacted protectionist measures against Chinese steel imports. If these protectionist measures were eventually eliminated, then all else equal, the price of steel in those countries would________ and the quantity of steel demanded in those countries would ________.

Answer 1

Answer:

Decrease; Increase

Explanation:

Protectionist approach is imposition of tariffs and other trade barriers to increase the price of the product being imported. These tariffs are imposed by the government to protect the home industry by making the home manufacturing less costly than the products that the foreign competitors are producing. This means if these trade barriers and tariffs are lifted then the foreign competitors can sell their product at lower cost than the home produced products. In other words, the price of the product would decrease due to foreign products being offered at low cost and the the demand would increase because of price demand relation.