Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 21.2, Problem 3ST
To determine
The effects of quota and tariff.
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Analyze the Economic Effects of Tariffs and Quotas. Give examples.
What are the similarities and differences between an important quota and an important tariff?
What are tariffs? How do tariffs affect consumers and producers well- being?
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- Show graphically that for any tariff, there is an equivalent quota that would give the same result. What would be the difference, then, between the two types of trade barriers? Hint: It is not something you can see from the graph.arrow_forwardWhat is the effect of placing tariffs on products imported into the U.S. from other countries? Are there any problems with this?arrow_forwardExplain the two distorting effects of the tariffarrow_forward
- If the demand of an imported good is perfectly inelastic, a tariff imposed on its import will be: a. Paid entirely by the domestic producers of the good b. Paid entirely by the consumers of the good c. Split between the consumers and producers of the good d. Split between the domestic and foreign producers of the goodarrow_forwardThe 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.arrow_forwardWould consumers benefit more from a tariff or a quota on importsarrow_forward
- Why do low income countries have higher tariffs than high income countries?arrow_forwardWhy would an importing country use a tariff rather than a quota?arrow_forwardExplain 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_forward
- What impact would a tariff on Chinese goods have on the consumer? How about producersarrow_forwardVietnam has a policy of free trade in motorcycles which are sold in world markets at a price of 10,000 per motorcycle. Under free trade, Vietnam produces 100,000 motorcycles and imports 100,000 motorcycles. To provide some protection to the domestic industry, Vietnam imposes an import tariff of $1500 per motorcycle. With this tariff in place, production in Vietnam rises by 5,000 motorcycles and consumption drops by the same amount. Calculate the effects of the tariff on: a. Consumer Surplus b. Producer Surplus c. Government Revenues d. Overall Welfare e. If the tariff imposed by the Vietnamese had led to small reduction in world prices of, say, 250 dollars, how, qualitatively, would the welfare calculations (a), (b), (c) and (d) above change?arrow_forwardWhatever can be done by a tariff can be done by a quota.arrow_forward
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