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

Question

Quizplus · Accepted Answer

While the Ricardian model shows that trade can be mutually beneficial, it does not take into account the distribution of gains within a country. This means that some groups within a country may benefit more from trade than others, leading to political pressure to restrict imports of certain goods that are seen as threatening to specific groups or industries.

The Ricardian Model of International Trade Demonstrates That Trade Can