Question

EMERGENCY PLEASE ...............................

Why is tariff preferred to quota if protectionist policies are unavoidable. Critically evaluate.

Answer 1

The protectionist policies are used to protect the domestic industries and employment and output get generated. Even though it creates the favorable outcomes, over the long run the restricted trade is not beneficial at all.

When the protectionist policies are unavoidable, the tariffs as comparison to the quota produce the less unfavourable outcomes. The quota altogether restrict the quantity of import whilst the tariffs raises the price level only. Thus tariffs is preferred to the quota when the protectionist policies are unavaoudable.

The WTO also seeking to eliminate the quota and coaxing the member nations to use the tariffs when protectionist policies are unavoidable.