What is the main argument made against tariffs?
AThey discourage free trade and block comparative advantage
BThey are always collected too slowly to be worth charging
CThey are impossible to apply to any service that is traded
DThey force a country to hold larger reserves of currency
Answer & Solution
Correct answer: A. They discourage free trade and block comparative advantage
1. The case against tariffs starts from what free trade is meant to achieve.
2. Free trade lets the principle of comparative advantage work most efficiently.
3. Tariffs discourage free trade and so block that principle from working.
4. The second argument against is that tariffs raise prices and cut the purchasing power of consumers.
5. Collection speed and currency reserves are not part of the case against tariffs.
6. Tariffs do apply to goods trade in practice, so impossibility is not the objection.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 3 "Competing in the Global Marketplace", section 3.3 Barriers to Trade_
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