The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods?
A) Import restrictions are the result of trade wars between hostile countries.
B) Trade can have significant harmful effects on some segments of a country's economy.
C) Restrictions on imports can have significant beneficial effects on domestic consumers.
D) The Ricardian model is often incorrect in its prediction that trade can be mutually beneficial.
E) Imports are only restricted when foreign-made goods do not meet domestic standards of quality.

Question

Quizplus · Accepted Answer

While the Ricardian model highlights the benefits of trade for nations, it can also have negative impacts on specific sectors or industries within those nations. These industries may face increased competition from cheaper imports and may face job losses or decreased profits. As a result, governments may restrict imports to protect domestic industries and workers, even at the expense of overall economic gains.

The Ricardian Model of International Trade Demonstrates That Trade Can