Free Trade and Protectionism Exercise

1. The Government of Australia has decided to protect its infant technology industry. How
could the Government achieve this while raising funds for itself? Explain using a diagram.
(4 marks)
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2. If Australia’s infant tech industry still claims that their Government is not doing enough to
protect them, outline three other safeguards could the Government take. (3 marks)
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3. Draw a labelled diagram to represent the effect of a subsidy scheme initiated by
Australia’s Government to protect its infant tech industry. (3 marks)

4. Explain how efficient the tech industry will be with a subsidy in place, with reference to
output, employment, total surplus and the validity of this protectionist policy. (6 marks)

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