Define is it preferable to use an import quota or a tariff, Financial Management

Assignment Help:

Suppose the government wants to limit imports of a certain good.  Is it preferable to use an import quota or a tariff?  Why?

Modification in domestic consumer and producer surpluses are similar under import quotas and tariffs.  There will be a loss in (domestic) total surplus in either case.  Though, with a tariff, the government can collect revenue equal to the tariff times the quantity of imports and these revenues can be again distributed in the domestic economy to offset the domestic deadweight loss by, for instance, reducing taxes.  So, there is less of a loss to the domestic society like a whole.  Along with the import quota, foreign producers can capture the variation among the domestic and world price times the quantity of imports.  Hence, with an import quota, there is a loss to the domestic society as a whole.  If the national government is trying to raise welfare, it should make use of a tariff.


Related Discussions:- Define is it preferable to use an import quota or a tariff

Mrs. Edwards, If invested 2500 in a bank that pays 1% annually. How long wi...

If invested 2500 in a bank that pays 1% annually. How long will it take for the funds to double?

Problems using walter''s model, the following information related to sun lt...

the following information related to sun ltd.paid-up capital-1000000. earnings of the co-100000. dividend paid-80000. price-earning ratio(pie)-20. no of equity shares-100000.find o

NPV, Roxanne invested $560,000 in a new business 7 years ago. The business ...

Roxanne invested $560,000 in a new business 7 years ago. The business was expected to bring in $8,000 each month for the next 26 years (in excess of all costs). The annual cost of

Accrued dividend, It is an accounting term which refers to the balance shee...

It is an accounting term which refers to the balance sheet item that accounts for dividends that have been confirmed but not yet given to shareholders. Accrued dividends are taken

What is post-acquisition integration, Post-acquisition integration In o...

Post-acquisition integration In order to have constructive discussions between organisations, it's strongly recommended that all participants in process adopt a set of ground r

Caselets, caselets of bajaj electronics

caselets of bajaj electronics

Define how earnings available to common stockholders, Define how earnings a...

Define how earnings available to common stockholders and common stock dividends paid from the current income statement influence the balance sheet item retained earnings. The a

Cost of capital, what is the cost of capital and advantages of it?

what is the cost of capital and advantages of it?

Find the minimum annual savings, Baldwin Company is interested in buying a ...

Baldwin Company is interested in buying a new corporate jet for $6 million. It will depreciate the jet fully in 5 years and then sell it for $5 million. The jet will use $60,000 in

DIVIDEND, dividend decisions has an influence on the share value and subseq...

dividend decisions has an influence on the share value and subsequently the overall company value.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd