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Chapter 9: Problem 1

What is a tariff? What is a quota? Give an example, other than a quota, of a nontariff barrier to trade.

Short Answer

Expert verified
A tariff is a tax or duty on a specific class of imports or exports. A quota limits the number or value of goods that can be traded. Another type of non-tariff barrier could be product standards that favor domestic goods over imports.

Step by step solution

01

Definition of tariff

A tariff is a tax or duty that a government places on a specific category of imports or exports, with the primary aim of restricting trade. The impacts can include protecting domestic industries from foreign competition, generating revenue for the government, and diplomatic negotiations.
02

Definition of quota

A quota is a government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a particular period. Quotas are used to protect domestic industries and maintain geopolitical relationships.
03

Example of a Non-tariff Barrier

Non-tariff barriers to trade are government laws, regulations, policies, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products. An example beyond a quota could be product standards. Governments might set certain standards that imported goods must meet, thus making it harder for foreign goods to compete with domestic goods.

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Most popular questions from this chapter

In the 2016 Summer Olympic Games, Ashton Eaton (from the United States) won a gold medal in the decathlon, which requires athletes to compete in 10 different track and field events. In one of these events Eaton ran a 100 -meter race in 10.46 seconds. In a separate event, Usain Bolt (from Jamaica) won a gold medal by running 100 meters in 9.81 seconds. a. Which performance-Eaton's or Bolt's-is better explained by the concept of comparative advantage? Briefly explain. b. Based on their performance at the 2016 Olympic Games, can we say whether Eaton or Bolt was the better athlete? Briefly explain.

(Related to the Apply the Concept on page 312 ) In \(2016,\) an editorial in the Wall Street Journal was in favor of, "repealing the notorious catfish program that has become a byword for Washington waste and protectionism? This should be an easy call." Why would a federal government program to inspect catfish be considered an example of protectionism? If repealing the program is "an easy call," as the editorial asserts, why was the program still in place in \(2017,\) more than a year after the editorial was published?

What events led to the General Agreement on Tariffs and Trade (GATT)? Why did the WTO eventually replace the GATT?

Hal Varian, chief economist at Google, made the following two observations about international trade: 1\. Trade allows a country "to produce more with less." 2\. "There is little doubt who wins [from trade] in the long run: consumers." Briefly explain whether you agree with either or both of these observations.

Every year, the Gallup Poll asks a sample of people in the United States whether they believe foreign trade provides "an opportunity for economic growth through increased U.S. exports" or whether they believe foreign trade represents "a threat to the economy from foreign imports." The following table shows the responses for 2 years. a. Do you believe that foreign trade helps or hurts the economy? (Be sure to define what you mean by "helps" or "hurts.") b. Why might the general public's opinion of foreign trade be substantially different during an economic recession, when production and employment are falling, than during an economic expansion, when production and employment are increasing? c. Typically polls show that people in the United States under 30 years of age have a more favorable opinion of foreign trade than do people age 65 and over. Why might younger people have a more favorable view of foreign trade than older people?
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