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When a Country Establishes Trade Restrictions, What Happens to the Revenues

Question 107

Multiple Choice

When a country establishes trade restrictions, what happens to the revenues of the domestic producers of goods that compete with the imported goods?  


A)  The domestic producers always lose revenue in the short run. 
B)  The domestic producers always gain revenue in the long run. 
C)  The domestic producers may lose revenue in the long run if protection stifles innovation and leaves the industry vulnerable. 
D)  The domestic producers may gain revenue in the short run because wages will fall in that industry.

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