Which of the following is a drawback of protectionism in international trade?

• A. It encourages innovation by allowing unrestricted access to foreign technology.
• B. It promotes economic growth by expanding export opportunities.
• C. It increases the efficiency of domestic industries by exposing them to global competition.
• D. It can lead to higher prices for consumers due to reduced competition.

Answer: (D)

Verified step by step guidance

1. Understand the concept of protectionism: Protectionism refers to government actions and policies that restrict or restrain international trade, often with the intent of protecting local businesses and jobs from foreign competition.
2. Identify the typical goals of protectionism: These include shielding domestic industries from foreign competitors, preserving jobs, and reducing trade deficits.
3. Analyze the effects of protectionism on consumers: When protectionist policies such as tariffs, quotas, or import bans are implemented, they reduce foreign competition in the domestic market.
4. Recognize the consequence of reduced competition: With fewer foreign competitors, domestic producers face less pressure to lower prices or improve quality, which can lead to higher prices for consumers.
5. Conclude that a key drawback of protectionism is that it can lead to higher prices for consumers due to reduced competition, which is a negative effect despite the intended protection of domestic industries.