Question

How can a country protect its domestic producers from international competition?

• A. By introducing heavy taxes on foreign goods
• B. By restricting the quantity of goods imported
• C. By abolishing trade barriers
• D. By restricting the entry of MNCs

Answer 1

Answer: (A), (B), (D)

By restricting the entry of MNCs

Due to their capacity to mobilise huge amounts of capital and manage operations, MNCs can produce quality goods at lower prices. Thus, domestic producers face tough competition in the market, and it hampers their growth. These domestic producers can be protected by using trade barriers like taxation and quota system.