Sample interview questions: How do you assess the economic impact of trade barriers?
Sample answer:
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Evaluate changes in consumer and producer surplus. Trade barriers, such as tariffs and quotas, can lead to higher prices for consumers and lower prices for producers. This can result in a loss of consumer surplus and a gain in producer surplus. The net economic impact depends on the relative magnitudes of these two effects.
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Consider the impact on economic efficiency. Trade barriers can also lead to a reduction in economic efficiency. This is because they prevent resources from being allocated to their most productive uses. For example, a tariff on imported cars may lead to higher prices for cars, which may discourage people from buying new cars. This can lead to a decline in the demand for cars, which can lead to job losses in the auto industry.
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Analyze the effects on innovation and technological progress. Trade barriers can also have a negative impact on innovation and technological progress. This is because they can make it more difficult for businesses to access new technologies and ideas. For example, a tariff on imported machinery may make it more expensive for businesses to purchase new equipment, which can slow down the pace of innovation.
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Consider the impact on economic growth. In the long run, trade barriers can also lead to slower economic growth. This is because they can make it more difficult for businesses to compete in the global marketplace. As a result, businesses may be less likely to invest and create jobs.
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Use various methods to quantify the economic impact of trade barriers. There are a number of methods that can be used to quantify the economic impact of trade barriers. These meth… Read full answer