trade policies and import protection 1
Trade Policies and Import Protection
1.Consider the (mythical!) country of â€œDevelopia,â€ which protects its rice farmers using an import quota. Answer all parts of this question based on the attached Figure below.
a.What is the quantity of rice imports allowed under the quota? What is the price of rice per ton with the quota? What would the price be and how much would be imported with free trade? Also identify the quantities of rice produced [supplied] and consumed [demanded] with the quota vs. free trade.
i.How would your answer to this part change if the import licenses were allocated via an auction?
ii.Alternatively, if the licenses were given out based on corruption (bribes to govern- ment officials)?
c.If the government wanted to give the same amount of protection to Developian rice producers using a tariff instead of the quota, what would be the tariff rate (in $/ton and also as a percentage)? How would this differ from a quota in terms of the welfare effects (gains and losses)?
d.Suppose the rice farmers in Developia are very poor peasants. What would be an alternative way for the government to help the poor rice farmers instead of using trade protection (tariff or quota)? HINT: Analyze how the government could use a subsidy for rice productionâ€”what would be the costs and benefits, compared with a tariff or quota? Why might the government prefer to keep the protection in place, in spite of the advantages of a subsidy?
e.â€œThinking outside the boxâ€ question (you should draw a graph, but no exact numbers or calculations are required): Suppose that the Developian economy grows, and as a result its demand for rice increases (HINT: the demand curve shifts to the right!). What would happen to the quantity of rice imported and to the price of rice under a quota vs. a tariff? How does this difference explain why tariffs are often preferred to quotas?
Study Acers provides students with tutoring and help them save time, and excel in their courses. Students LOVE us!No matter what kind of essay paper you need, it is simple and secure to hire an essay writer for a price you can afford at StudyAcers. Save more time for yourself. Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more