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8. (8 pts.) Tariffs and quotas are both trade restrictions. Explain one way that tariffs and...

8. (8 pts.) Tariffs and quotas are both trade restrictions. Explain one way that tariffs and quotas are different. Also, explain one way the tariffs and quotas are similar (other than both being trade restrictions).

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Answer #1

Tariff refers to imposing the taxation on foreign goods entering to the domestic countries economy another and quota refers physical quantity of foreign goods restricted to entering the domestic market

The fundamental difference is that under tariff any number of the foreign good,s allowed enter the domestic country but in Quotas system, they are not allowed example after certain units of the goods foreign goods are not allowed enter the domestic market.

The similarity of the Quotas and Tariff are followed.

  • The consumer welfare reduce by raising the price and reducing the quantity of the goods
  • The domestic producers are saved due to foreign competation.

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