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Removal of Import Tariffs and its Impact on Country's Output

Question

Analyse how the removal of import tariffs could increase a country’s output.

Category:

International Trade and Exchange Rates

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Preview Answer

I. 🍃Introduction
- Explanation of the removal of import tariffs and its potential effects

II. Lower price of imports
- Explanation of how the removal of import tariffs would reduce the price of imports
- Discussion of how this would enable firms to buy better quality products

III. Lower cost of production
- Explanation of how a lower price of imported raw materials would reduce the cost of production
- Discussion of how this may lower the price of finished products, increasing demand and stimulating firms to produce a higher output

IV. Increased competition
- Discussion of how a lower price of imports may put pressure on domestic firms to be more competitive
- Explanation of how this may encourage them to be more efficient, raising quality, lowering price, and increasing sales
- Discussion of how this would stimulate firms to produce a higher output

V. Attraction of MNCs
- Explanation of how the removal of import tariffs may attract MNCs into the country as it is a move towards free trade

VI. Encouragement of other countries
- Discussion of how the removal of import tariffs may encourage other countries to remove tariffs
- Explanation of how this would increase global output and allow firms to specialize

VII. 👉Conclusion
- Summary of the potential effects of the removal of import tariffs
- Discussion of the potential benefits and drawbacks of this policy change.

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