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...
US are experiencing a productivity growth. When comparing to other countries with lower productivity growth, we expect to see
a. Its exchange rate appreciating b. Its exchange rate depreciating c. It has no effect on the US exchange rate d. None of the above
If two large firms from different industries merge,
a. industry concentration rises b. industry concentration falls c. the total assets of the top 200 firms in the country will stay the same d. industry concentration rises in one market and falls in the other e. industry concentration is not affected