Economics SL
4
Chapters
96
Notes
Unit 1 - Intro to Econ & Core Concepts
Unit 2 - Microeconomics
Unit 3 - Macroeconomics
Unit 4 - The Global Economy
Economics SL
Unit 4 - The Global Economy
The Downfalls of Protectionism A Comprehensive Overview
535 words
3 mins read
Last edited on 5th Nov 2024
Table of content
Inefficiency breeds monopoly power
- What's Happening: Domestic firms face less competition, leading to more power for them and less efficiency.
- Real-World Example: Imagine a local burger joint that's the only one in town. Without competition, they can serve soggy fries, and what are you going to do about it? Nothing!
- In Simple Terms: No competition = Lazy businesses.
Prices skyrocket for buyers
- What's Happening: Higher prices for domestic firms lead to less money for households to spend on other goods and services.
- Real-World Example: If the only phone brand available in your country is super expensive, you'll have less money to buy those cool sneakers.
- In Simple Terms: Expensive things at home = Less money for other fun stuff.
Rising production costs & inflation
- What's Happening: Protectionism makes raw materials expensive, leading to cost-push inflation.
- Real-World Example: If car factories have to pay more for steel due to tariffs, the price of cars goes up. Vroom, vroom...inflation!
- In Simple Terms: Importing gets costly = Everything gets costly.
Bad news for export-oriented firms
- What's Happening: Protectionism makes it tough for companies that sell goods abroad.
- Real-World Example: Imagine the USA's Harley-Davidson bikes becoming expensive due to steel tariffs. Sales drop, and so do jobs.
- In Simple Terms: Protectionism = Less competitive internationally.
Potential trade wars
- What's Happening: Other countries may respond with their tariffs.
- Real-World Example: USA vs. China in a tariff tug of war. Spoiler alert: nobody wins!
- In Simple Terms: Start a tariff battle = Everybody gets hurt.
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Economics SL
Unit 4 - The Global Economy
The Downfalls of Protectionism A Comprehensive Overview
535 words
3 mins read
Last edited on 5th Nov 2024
Table of content
Inefficiency breeds monopoly power
- What's Happening: Domestic firms face less competition, leading to more power for them and less efficiency.
- Real-World Example: Imagine a local burger joint that's the only one in town. Without competition, they can serve soggy fries, and what are you going to do about it? Nothing!
- In Simple Terms: No competition = Lazy businesses.
Prices skyrocket for buyers
- What's Happening: Higher prices for domestic firms lead to less money for households to spend on other goods and services.
- Real-World Example: If the only phone brand available in your country is super expensive, you'll have less money to buy those cool sneakers.
- In Simple Terms: Expensive things at home = Less money for other fun stuff.
Rising production costs & inflation
- What's Happening: Protectionism makes raw materials expensive, leading to cost-push inflation.
- Real-World Example: If car factories have to pay more for steel due to tariffs, the price of cars goes up. Vroom, vroom...inflation!
- In Simple Terms: Importing gets costly = Everything gets costly.
Bad news for export-oriented firms
- What's Happening: Protectionism makes it tough for companies that sell goods abroad.
- Real-World Example: Imagine the USA's Harley-Davidson bikes becoming expensive due to steel tariffs. Sales drop, and so do jobs.
- In Simple Terms: Protectionism = Less competitive internationally.
Potential trade wars
- What's Happening: Other countries may respond with their tariffs.
- Real-World Example: USA vs. China in a tariff tug of war. Spoiler alert: nobody wins!
- In Simple Terms: Start a tariff battle = Everybody gets hurt.
Unlock the Full Content!
Dive deeper and gain exclusive access to premium files of Economics SL. Subscribe now and get closer to that 45 🌟