The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4

-Protection from foreign competition benefits domestic producers in the protected industry at the expense of domestic consumers.

Question

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
 
-Protection from foreign competition benefits domestic producers in the protected industry at the expense of domestic consumers.

Quizplus · Accepted Answer

If the government imposes protectionist policies such as tariffs or quotas on imported cocoa, the supply curve shifts to the left, creating a new equilibrium price and quantity. This protects domestic cocoa producers as they can now sell their product at a higher price. However, this increased price is paid by domestic consumers, who now have to pay more for cocoa. Therefore, protection from foreign competition benefits domestic producers at the expense of domestic consumers.

The Figure Below Shows the Demand (D) and Supply (S)