2. (i) First describe in general, a tariff and an import quota. (ii) What are the...

2. (i) First describe in general, a tariff and an import quota.
(ii) What are the primary differences between them?
(iii) Using a diagram for each, show how an increase in demand would affect such macroeconomic variables as (a) the price, (b) imports, (c) domestic production and (d) government revenue, much as we did in class. Be sure to show these effects on your two graphs.

Expert Solution

i) 1.Tariff: It is a tax imposed by the government on exports or imports of goods.

2. Import Quota: It is restriction imposed by the government by on imports of goods in terms of limitation of quantity. Which means only limited amount of quantity of goods ( This limit is fixed by the government for different goods) are allowed to import. The oblejctive of this policy is to promote research and develpoment for producing such goods in own country.

ii) The primary difference between tham is that tariff is a tax where as import quota is the quantitavie restrictions.

iii)

Rahul Sunny answered 7 months ago

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