Explain how an import quota might be more inefficient than an import tariff that has the same impact on prices.
What will be an ideal response?
An import quota results in a difference in the price at which exporters buy and the price at which they sell. With a tariff, that difference is paid as a tax to the government -- so someone benefits. In the case of import quotas, exporters will get that same benefit as profit unless they have to compete (in terms of something like lobbying) to get the right to be the ones to export and import. If such political competition for the right to export and import exists, the effort expended in the process may be socially wasteful in the sense that it is a cost for the firms who export and import but it is not received as a benefit by anyone else.
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During a recession the unemployment rate generally ________ and during an expansion the unemployment rate generally ________
A) rises; rises B) rises; falls C) rises; does not change D) falls; rises E) does not change; falls
Non-paying activities in economics are referred to as:
A) relief. B) leisure. C) free time. D) unemployment.
The comparative advantage of the South was in
(a) small farms producing for the local market. (b) plantation agriculture producing for export. (c) manufacturing. (d) shipbuilding and trades related to shipbuilding.
The freedom of consumers to cast their dollar votes to buy, or not to buy, at prices determined in competitive markets describes:
a. socialism. b. communism. c. consumer sovereignty. d. the aspirations of Karl Marx.