Which of the following factors typically decrease as a result of protectionist policies?

• A. Social benefits, external costs, and market demand
• B. Market supply, technological innovation, and public goods provision
• C. Consumer surplus, economic efficiency, and international trade
• D. Producer surplus, government revenue, and domestic employment

Answer: (C)

Verified step by step guidance

1. Step 1: Understand what protectionist policies are. These are government actions like tariffs, quotas, and import restrictions designed to protect domestic industries from foreign competition.
2. Step 2: Identify the economic effects of protectionism. Protectionist policies generally increase prices for consumers and reduce the quantity of imports, which affects consumer surplus, economic efficiency, and international trade.
3. Step 3: Recall that consumer surplus is the difference between what consumers are willing to pay and what they actually pay. Protectionism tends to raise prices, thus decreasing consumer surplus.
4. Step 4: Economic efficiency refers to the optimal allocation of resources where no one can be made better off without making someone else worse off. Protectionism distorts market outcomes, leading to inefficiencies and a decrease in overall economic efficiency.
5. Step 5: International trade usually decreases under protectionist policies because barriers reduce the volume of imports and exports, limiting the gains from trade between countries.