What is the primary purpose of a protective tariff in economics?

• A. To promote free trade between countries
• B. To shield domestic industries from foreign competition by making imported goods more expensive
• C. To reduce government revenue by lowering taxes on imports
• D. To encourage exports by subsidizing domestic producers

Answer: (B)

Verified step by step guidance

1. Understand the concept of a tariff: A tariff is a tax imposed by a government on imported goods.
2. Recognize the effect of a protective tariff: It raises the price of imported goods, making them more expensive compared to domestic products.
3. Analyze the purpose of making imports more expensive: This discourages consumers from buying foreign goods and encourages them to buy domestically produced goods instead.
4. Identify the economic goal: The primary goal is to shield domestic industries from foreign competition, helping them to grow or maintain market share.
5. Distinguish protective tariffs from other trade policies: Unlike free trade promotion or export subsidies, protective tariffs specifically aim to protect local industries by increasing import costs.