## 4. A Graphical Comparison of Tariffs and QuotasBorzia and Ardon are small countries protecting their economic growth from rapid globalization by limiting TV imports to 20 million units. Borzia imposes a $2,000 tariff per television, while Ardon uses a 20 million unit quota. Both countries have identical domestic demand ($D_0$) and supply ($S$) curves, with the initial world price ($P_W$) at $3,000. Under these conditions, TVs are priced at $5,000 in each country.### Graph Explanation- **Axes**: - **X-axis**: Quantity (millions of televisions). - **Y-axis**: Price (dollars per television).- **Lines**: - **$D_0$ and $D_1$**: Demand curves. - **$S$**: Supply curve. - **$P_W$**: Horizontal line indicating the world price at $3,000.- **Equilibrium Points**: Different stars on the graph represent equilibrium points at various levels of tariff and quota implementations.The graph illustrates how the tariff and quota policies affect the equilibrium price and quantity of televisions in both countries. ### Transcription of Economic Concepts Regarding Television Demand in Two Countries#### Scenario OverviewSuppose that in both countries, the demand for televisions rises from $ D_0 $ to $ D_1 $.#### InstructionsAssuming Borzia keeps the tariff at $2,000 per television, complete the first row of the following table by calculating each of the values given this increase in demand. Assuming Ardon maintains a quota of 20 million televisions, complete the second row of the table by calculating each of the values given this increase in demand.#### Table for Data Input| Country | Price (Dollars) | Quantity Demanded at New Price (Millions of televisions) | Imports (Millions of televisions) ||---------------------------|-----------------|----------------------------------------------------------|-----------------------------------|| Borzia (tariff = $2,000) | | | || Ardon (quota = 20 million televisions) | | | |#### True or False StatementThe increase in demand helps domestic producers but hurts domestic consumers in Ardon.- ☐ True- ☐ False#### Multiple Choice QuestionWhich of the following explain why a tariff is a ___________ restrictive trade barrier than an equivalent quota. **Check all that apply.**- ☐ An exporter can try to cut costs or slash profit margins.- ☐ Importers who are able to pay the tariff duty will get the product.- ☐ A tariff prevents domestic consumers from buying imports even if they are willing to pay a higher price.### ExplanationComplete the table and questions based on economic principles of tariffs and quotas, considering how increased demand impacts pricing, quantity demanded, and imports under different trade policies.

Tariff and quotas are the two important measures that are used to restrict the imports in a domestic…

4. A graphical comparison of tariffs and quotas Borzia and Ardon are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $3,000. In Borzia, the government decides to impose a tariff of $2,000 per television; in Ardon, the government implements a quota of 20 million televisions. Assume that Borzia and Ardon have identical domestic demand (Do) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $5,000 per television in each country. PRICE (Dollars per television) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 PW 0 10 Do D₁ ☆ 20 30 40 50 60 70 80 QUANTITY (Millions of televisions) S 90 100 ?

4. A graphical comparison of tariffs and quotas Borzia and Ardon are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $3,000. In Borzia, the government decides to impose a tariff of $2,000 per television; in Ardon, the government implements a quota of 20 million televisions. Assume that Borzia and Ardon have identical domestic demand (Do) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $5,000 per television in each country. PRICE (Dollars per television) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 PW 0 10 Do D₁ ☆ 20 30 40 50 60 70 80 QUANTITY (Millions of televisions) S 90 100 ?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

## 4. A Graphical Comparison of Tariffs and Quotas

Borzia and Ardon are small countries protecting their economic growth from rapid globalization by limiting TV imports to 20 million units. Borzia imposes a $2,000 tariff per television, while Ardon uses a 20 million unit quota. Both countries have identical domestic demand ($D_0$) and supply ($S$) curves, with the initial world price ($P_W$) at $3,000. Under these conditions, TVs are priced at $5,000 in each country.

### Graph Explanation

- **Axes**:
- **X-axis**: Quantity (millions of televisions).
- **Y-axis**: Price (dollars per television).

- **Lines**:
- **$D_0$ and $D_1$**: Demand curves.
- **$S$**: Supply curve.
- **$P_W$**: Horizontal line indicating the world price at $3,000.

- **Equilibrium Points**: Different stars on the graph represent equilibrium points at various levels of tariff and quota implementations.

The graph illustrates how the tariff and quota policies affect the equilibrium price and quantity of televisions in both countries.

### Transcription of Economic Concepts Regarding Television Demand in Two Countries

#### Scenario Overview
Suppose that in both countries, the demand for televisions rises from $ D_0 $ to $ D_1 $.

#### Instructions
Assuming Borzia keeps the tariff at $2,000 per television, complete the first row of the following table by calculating each of the values given this increase in demand. Assuming Ardon maintains a quota of 20 million televisions, complete the second row of the table by calculating each of the values given this increase in demand.

#### Table for Data Input

| Country | Price (Dollars) | Quantity Demanded at New Price (Millions of televisions) | Imports (Millions of televisions) |
|---------------------------|-----------------|----------------------------------------------------------|-----------------------------------|
| Borzia (tariff = $2,000) | | | |
| Ardon (quota = 20 million televisions) | | | |

#### True or False Statement
The increase in demand helps domestic producers but hurts domestic consumers in Ardon.

- ☐ True
- ☐ False

#### Multiple Choice Question
Which of the following explain why a tariff is a ___________ restrictive trade barrier than an equivalent quota. **Check all that apply.**

- ☐ An exporter can try to cut costs or slash profit margins.
- ☐ Importers who are able to pay the tariff duty will get the product.
- ☐ A tariff prevents domestic consumers from buying imports even if they are willing to pay a higher price.

### Explanation
Complete the table and questions based on economic principles of tariffs and quotas, considering how increased demand impacts pricing, quantity demanded, and imports under different trade policies.

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