Trade restrictions affect the overall welfare of an economy, since they change t

Question

Trade restrictions affect the overall welfare of an economy, since they change the price consumers pay for a good and the quantity produced and consumed domestically. Trade restrictions, such as quotas, usually benefit domestic and hurt domestic because they the domestic price of a good. True or False: Producers find it difficult to exert the political influence needed to establishment trade restrictions because the benefits to producers are very small and widely dispersed, which makes it difficult for producers to organize. True False

Explanation / Answer

(a) Trade restrictions such as quotas usually benefit domestic producers and hurt domestic consumers because they increase the domestic price of a good.

(b) FALSE

Benefit to consumers are small and widely dispersed.

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