Question

Please respond both questions by one paragraph for each.

1. Describe some of the differences between tariffs and quotas?

2. What are the intent and impact of domestic content requirements?

Answer 1

1) The tariff is tax imposed on imports whereas the quotas are quantitative restrictions on imports.Tariffs is the tax levied on imports whereas quota is the quantitative restrictions on imports.Tariff increases the GDP whereas Quota has no effect on GDP.Tariff increases the price of foreign goods so it decreases consumer surplus and increases producers surplus whereas quota decreases consumer surplus.The proceeds from tariff is passed to the government whereas the quota does not generate revenue but makes the country self sufficient in the production of goods.

2) The domestic content requirement will make the domestic producers more competitive and insists that more products are manufactured domestically.The domestic producers will benefit but domestic consumers will have limited choice and the goods so manufactured will have their prices increased as the country is using more scarce resources to manufacture such products.It will increase jobs in the domestic market and the country will rely less on imports.