Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 18, Problem 6CQ
To determine
The beneficial group of the import restriction and the disadvantaged group.
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Assume that you have been hired by an International Organization to be consulted on various issues that the country Motherland faces. For this exercise, assume that Motherland is a small agricultural economy.The biggest trading partner of Motherland is the United States. Unlike Motherland, the United States is a large industrial country
Motherland imports electronics from the United States. The government of Motherland is considering to impose quotas on these electronics imports coming from the United States. Would you recommend it? Explain your answer. In your explanation, distinguish the effect on the consumers of electronics, the domestic producers of electronics and the government.Your explanation should not exceed 200 words.
Assume that you have been hired by an International Organization to be consulted on various issues that the country Motherland faces. For this exercise, assume that Motherland is a small agricultural economy. The biggest trading partner of Motherland is the United States. Unlike Motherland, the United States is a large industrial country.
Assume Motherland imports electronics from the United States. The government of Motherland is considering to impose quotas on these electronics imports coming from the United States. Would you recommend it? Explain your answer. In your explanation, distinguish the effect on the consumers of electronics, the domestic producers of electronics and the government.Your explanation should not exceed 200 words.
Tariffs and quotas are costly to consumers because
the price of the imported good falls
the supply of the imported good increases
import competition increases for domestic goods
consumers shift purchases to higher-priced domestic goods
Chapter 18 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- For each of the following statements, indicate whether it is true or false for a country that opens up to trade. Statement True False The greater the elasticity of domestic demand for the good it exports, the greater the rise in consumer surplus from trade. Consumers can still benefit from imports even if domestic demand is perfectly inelastic. Domestic producers of an imported good can benefit if domestic supply is perfectly inelastic.arrow_forwardWhich of the following is NOT a possible positive outcome related to tariffs? A Improved national security B Reduced domestic unemployment C Tariffs can lead to increased rent seeking D Allows new industries to more quickly reach economies of scalearrow_forwardHow does the imposition of tariffs on imported goods affect the total cost of production for domestic industries in the long run?arrow_forward
- It is appropriate for a country to impose trade restrictions on exports that might endanger its national security. True Falsearrow_forwardFor any country that allows free trade, the domestic price is equal to the world price. both producers and consumers in that country gain when domestic products are exported, but both groups lose when foreign products are imported. domestic quantity demanded is greater than domestic quantity supplied at the world price. domestic quantity demanded is equal to domestic quantity supplied at the world price.arrow_forwardWhen a country allows trade and becomes an importer of a good, which of the following is NOT a consequence? The price received by domestic producers of the good decreases. The gains of domestic consumers of the good exceed the losses of domestic producers of the good. The gains of domestic producers of the good exceed the losses of domestic consumers of the good. The price paid by domestic consumers of the good decreases.arrow_forward
- Suppose the government of the U.S. wants to protect the domestic sugar industry by restricting sugar imports. Suppose the U.S. produces sugar domestically according to the supply curve QS = P, and suppose the domestic demand for sugar is QD = 8 – P. The world price of sugar is $2. For price of sugar, the units are $/lb., and for quantity of sugar, the units are 1,000,000 Ibs./year.arrow_forwardTariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement: Question 49 options: contains one error; the trade restraints do not increase the scarcity of foreign-produced goods. contains one error; domestic producers gain at the expense of foreign producers rather than domestic consumers. contains two errors; trade restraints do not increase the domestic scarcity of product and neither do they harm domestic consumers. is essentially correct.arrow_forwardA country decides to impose higher tariffs on imported goods to encourage domestic production. This policy change impacts the circular flow of income and expenditure by altering the dynamics of international trade. In this scenario, the imposition of tariffs on imports primarily:A) Acts as a leakage in the circular flowB) Functions as an injection into the circular flowC) Has no significant impact on the circular flowD) Reduces government expenditure in the circular flow Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.arrow_forward
- Supporters of the jacket quota over free trade argue that the trade restriction will save jobs in the United States. What are the potential pitfalls of such an argument? Check all that apply. China may retaliate, imposing restrictions on their imports from the United States, thereby generating unemployment in U.S. export industries. Consumers will likely divert large amounts of scarce resources toward lobbying for the removal of the quota. Trade restrictions simply reshuffle jobs by increasing employment in the protected industry and reducing employment in other industries. The costs to domestic jacket consumers may outweigh the benefits of jobs saved in the jacket industry.arrow_forwardEconomists generally agree that trade restrictions are detrimental to trade and reduce government efficiency. Why then do governments restrict trade? Arguments for restricting trade include to promote national defense, to impose sanctions on other countries, to protect domestic infant industries, to create or preserve domestic jobs, to ensure fair competition, and to retaliate for unfair trade policies of other governments Match each action to the correct argument for trade intervention Limits on trade with certain countries import duties on products from a foreign country Subsidies for industries considered vital to national security Subsidies for emerging industries Counterpan on imports Argument for Intervention To provide for national defense To impose sanctions To protect infant industries To ensure fair competition To provide retaliation Action Counterban on imports Limits on trade with certain countries import duties on products from a foreign country Subsidies for emerging…arrow_forwardSuppose Japan is a small rice importer. At the world free trade price, Japan's domestic production of rice is Q1. In autarky, Japan's domestic production of rice will be Q2. The Japanese government believes that to preserve Japanese rice growing culture, the domestic rice production should be at Q3 and Q1arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
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