Difference between an export tax and an export subsidy

Reference no: EM13184047

1.If you were an import-competing producer in a growing market, which trade instrument would you prefer-a tariff, an import quota, or a subsidy? Why?

2.How does an import quota differ from a tariff? Can the government ever capture the quota rent? How?

3.What is the difference between an export tax and an export subsidy? Which instrument are domestic consumers likely to prefer? Why?

4.Why might the use of a tariff to decrease aggregate unemployment in a country eventually generate an increase in aggregate unemployment in that country?

5.You have learned that a subsidy is preferable to a tariff if the objective is to generate a given amount of employment in an individual industry. Explain this point in language understandable to someone untrained in economics.

Reference no: EM13184047

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