Question

Who gains and who loses from import restrictions? In answering, you should consider both consumers and producers in both the country that imposes the restrictions and in the other countries affected by them. Also, be sure to take into account the effects of import restrictions on export industries.

Answer 1

IMPORT RESTRICTIONS:

The import restrictions is as follows,

1. These are refer to various tariff and non-tariff barriers obligatory by an importing nation to control the quantity of goods Importing into the country from foreign countries.
2. Import restrictions are adopted to preserve the exchange rate of the country's currency.

major import restrictions include:

Major import restrictions include as follow,

1. The import duties imposed goods also known as tariff to make them costlier, import licenses that limit the total quantity of goods imported also known a import also known as import quotas.
2. The currency restrictions limiting the amount of foreign exchange existing for payment of imports, and measures preventing entry of illegal or harmful items.

IMPORT RESTRICTIONS :

• The import restrictions are having the impact on the both consumer and producer of domestic country as well as foreign countries.
• Some of them gains from them while other have to face loses.
• Import restriction limited the market for products as the consumer choice, it prevents domestic markets from world competition as a result producer able to keep their prices high in domestic market as a result producer revenue increases.
• Thus, import restrictions diminish consumer surplus at the cost of improved producer surplus.
• The total society welfare which is a combination of consumer and producer surplus is lower in the absence of free trade.
• Consumers of imported goods producers that use those goods as intermediate goods are face loses by import restrictions.
• Similarly, producers of those goods as well as their employees are hurt because foreign incomes are lowered by domestic import restrictions.
• The export industries revenue because producer are not able to take gains from economics of scale.