Question: President Reagan negotiated a voluntary import quota on Japanese cars
President Reagan negotiated a “voluntary” import quota on Japanese cars sold in the United States in the early 1980s. Some of his advisers had recommended that he impose a higher import tax (tariff) instead. Assuming the tariff was in the form of a constant tax T per Japanese car sold in the United States and that T was chosen to produce the same quantity reduction as the quota, how will the prices paid for Japanese cars by U. S. consumers compare under the two policies?
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