Download file to see previous pages...
Increase in tariffs increase the revenue for government as it serves as a tax which is imposed whereas quotas may or may not increase the revenue for the government. However, there are also welfare impacts of the quota and tariffs also on the domestic economy which can indicate that the protectionism may not be good for the economy.
The above diagram shows the impact of having quotas on the supply level and the prices and how the imposition of quotas will create welfare loss for the consumers. The above graph indicates that the world supply is elastic in nature and is indicated by a horizontal line showing SH+Q. The line DH indicates the overall demand in the market and the interaction of supply and demand indicates the market clearing conditions at different price and quantity levels.
Recently, US has imposed higher tariff on the import of tires from China in a bid to protect the ailing tire industry of the country which resulted into the job losses for last five years. (Whoriskey and Kornblut).
Now that tariff is imposed on the import of Chinese so that the production is reduced. As a result of this, the price level will move to Pw’ from Pw in local market for locally manufactured tires. As a result of the tariff imposition, the supply will reduce and the aggregate supply curve will shift leftward to SH. This reduction in the supply and the increase in prices will therefore result into the decrease in the supply and the increase in prices therefore will not only result into the reduction of consumer surplus but will also result into the welfare loss. This is because the imposition of the tariff increases the domestic prices over and above the world prices thus making the domestic consumers more worse off owing to the increase in the prices.
The imposition of tariffs on the import of Chinese tires will first disrupt the equation of trade balance between both the countries as US’s import of tires from China will reduce as the imported
...Download file to see next pagesRead More
There is a reduction in growth rate as experienced in other developing countries for example 3.2%-2.6% rates in Kenya during the same period. Like other developing country, its population has doubled since 1990 due to the high population growth rate. However, its fertility rate is reducing just as the case in other developing countries for example from 7.0% between 1990-1995 and to a projected rate of 4.8% between 2010-2015.
The disappearing jobs and the devaluation in the home prices had compelled the consumers to cut down on their costs which adversely affected the labor market as the business laid off their workers to reduce costs, eventually making the country enter into a vicious downward cycle.
As the global economic slow began to shed its effect, major economies began to resort on the protectionist measures. Protectionism is not only a problem at the national level, and European Union was inclined to use the policies to regulate certain issues (Ringe and Bernitz, p.
The definition of the EU council was an important starting point, since it elaborates on the nature of the body under study and what its roles are. To start with, I consulted the 11th edition of the book titled EU Law by J. Steiner, since it gave a comprehensive definition of the EU council and its roles ‘(Steiner, 2012)’.
Oftentimes, economics strongly asserts or assumes that the world behaves according to the models that it has developed and recommends policies based on models that do not adequately consider or factor in social and historical
The market system is said to be a very just system where everyone gets what he or she deserves and there are no monopolies and government control on prices.
There are many reasons why market system is considered the best mechanism of allocating scare resources.
“The Hunt brothers believed that inflation would result in silver becoming a haven, just like its more expensive cousin, gold... Bunker foresaw at least a tenfold increase in the price of silver as a result of the plummeting
The overall structure of the industry suggest that there are two type of producers i.e. the one who produce and manufacture mobile phones and other ones who provide data services to communicate and perform other tasks
Gray markets do result, as you say, in companies losing out on profits and also further growth opportunities because of a perceived lack of quality products. However, some potential customer resentment would still result