Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 18, Problem 9CQ
To determine
The difference between tariffs and quotas and why some prefer quota over tariff.
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Analyze the Economic Effects of Tariffs and Quotas. Give examples.
Why would an importing country use a tariff rather than a quota?
The effect of imposing a tariff on a specific imported good is to
the domestic price of the good and
the domestic production of the good. Select one: a. increase; increase b. decrease; increase c. decrease;
decrease d. decrease; to leave unaffected.
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Economics: Private and Public Choice
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- Explain why a quota may result in lower total surplus in the home country than a tariff, even if they have the same effect on imports and the domestic price.arrow_forwardWhen a large country imposes a tariff for a certain good it imports,it often affects the foreign price of the good as well. Is this statement true? Justify the answerarrow_forwardThe demand for cameras in a certain country is given by D = 8000 – 30P, where P is the price of acamera. Supply by domestic camera producers is S = 4000 + 10P. If this economy opens to tradewhile the world price of a camera is $50, and the government imposes a tariff of $30 per camera,what will be the quantity of cameras that this country imports or exports?arrow_forward
- Ghana imports and exports food from and to neighbouring Côte d'Ivoire. The latter nation is very similar to Ghana in most ways. Can you explain what may drive two very similar nations to trade?arrow_forwardWhat are the benefits and costs of import tariffs?arrow_forwardIdentify and explain who will make and lose money from this tariff. Identify the people and organizations that will benefit from the tariff. Identify the people and organizations that will suffer because of the tariff. How will the tariff impact your company?arrow_forward
- Explain how a US tariff on foreign trucks would affect each group in the economy. Picture down below to answer. It's a match-match each word is only used once.arrow_forwardWhat benefits do export quotas provide? In your opinion, what does the U.S produce that would benefit the American people if an export quota was put in place on it?arrow_forwardThe graph above is the U.S. market for some imported good. Supply is a flat curve. The U.S. can import the Chinese good for $40 and the Mexican good for $48. Assume the U.S. imposes $10 tariffs on each unit of the imported good. What will be the quantity imported? From which country? How your answer will change if the U.S. keep the $10 tariffs but join a trade bloc with Mexico? Will the country’s wellbeing increase or decrease? By how much (hint find the change in consumer surplus and the change in government revenue)? Explain your answers.arrow_forward
- How do tariffs impact domestic industries and international trade relationships?arrow_forwardCarefully explain how the imposition of a tariff is different for a large country (that can affect the world price) than a small country. Show your work graphically and explain in words.arrow_forwardUsing the import demand of the U.S. and export supply of China, explain how the imposed tariff led to “a sharp decline in bilateral trade, higher prices for consumers” and lower prices of exports by Chinese firms.arrow_forward
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