Which is more effective in blocking imports, a tariff or a quota?
What will be an ideal response?
Generally, an import quota, especially if it is set low, is more effective in blocking the entry imports into a nation. The reason is that once the import quota has been met, no more goods can be imported into the nation. With a tariff, it is still possible to import goods into a nation, so long as people are willing to pay the tariff on the imported good. Of course the precise answer depends on how low the quota is and how high the tariff is on the product.
You might also like to view...
What has been the most significant obstacle to progress in the Doha Round?
What will be an ideal response?
Based on the graph for saving incentives, a tax law change encouraging saving would ______.
a. create a negative equilibrium real interest rate
b. have little or no effect on the equilibrium real interest rate
c. increase the equilibrium real interest rate
d. decrease the equilibrium real interest rate
Macroeconomics involves the study of the decision-making of individual firms or individuals.
Answer the following statement true (T) or false (F)
A monopolistic industry will have lower output and higher prices than a competitive industry.
a. true b. false