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Chapter 20: Q.56 (page 492)

You have just been put in charge of trade policy

for Malawi. Coffee is a recent crop that is growing

well and the Malawian export market is developing. As such, Malawi coffee is an infant industry. Malawi coffee producers come to you and ask for tariff protection from cheap Tanzanian coffee. What sorts of policies will you

enact? Explain.

Short Answer

Expert verified

Policies that can provide subsidies will be more beneficial for the Malawi coffee industry.

Step by step solution

01

Step 1. Meaning 

Trade policies are the policies that are introduced as trade-oriented.

Infantry industries are the Industry that recently came into existence or developing industries.

02

Step 2. Explanation 

Infant industries have greater potential & it is always the good policy that provides subsidies to grow more & extension, rather than imposing tariffs on another industry, traffic could be a short-term approach but by subsidies, a country can enjoy long-term benefits.

if Malawi's government provides subsidies to the coffee industry then that country can extend its capital, add more workforce & does more marketing that will enhance the export of the industry.

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Most popular questions from this chapter

What is the general trend of trade barriers over recent decades: higher, lower, or about the same?

Why might a tax on domestic consumption of resources critical for national security be a more efficient approach than barriers to imports?

Why would countries promote protectionist laws, while also negotiate for freer trade internationally?

Is it legitimate to impose higher safety standards on imported goods that exist in the foreign country where the goods were produced?

The country of Pepper land exports steel to the Land of Submarines. Information for the quantity demanded (Qd) and quantity supplied (Qs) in each country, in a world without trade, are given in Table.

Price\(Qd
Qs
60230180
70200200
80170220
90150240
100140250

Table 20.6 Pepper land

Price\)Qd
Qs
60430
310
70420330
80410360
90400400
100390440

Table 20.7 Land of Submarines

a. What would be the equilibrium price and quantity in each country in a world without trade? How can you tell?

b. What would be the equilibrium price and quantity in each country if trade is allowed to occur? How can you tell?

c. Sketch two supply and demand diagrams, one for each country, in the situation before trade.

d. On those diagrams, show the equilibrium price and the levels of exports and imports in the world after trade.

e. If the Land of Submarines imposes an antidumping import quota of 30, explain in general terms whether it will benefit or injure consumers and producers in each country.

f. Does your general answer change if the Land of Submarines imposes an import quota of 70?
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