4. A graphical comparison of tariffs and quotas Aniva and Kartaly are small countries that protect...

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4. A graphical comparison of tariffs and quotas Aniva and Kartaly are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $2,000. In Aniva, the government decides to impose a tariff of $3,000 per television; in Kartaly, the government implements a quota of 20 million televisions. Assume that Aniva and Kartaly have identical domestic demand (De) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $5,000 per television in each country. 10000 PRICE (Dollars per television) 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Do D₁ 20 30 40 50 60 70 60 QUANTITY (Millions of televisions) S K 90 100 ? Suppose that in both countries, demand for televisions rises from Do to D₁. Assuming Aniva keeps the tariff at $3,000 per television, complete the first row of the following table by calculating each of the values given this increase in demand. Assuming Kartaly maintains a quota of 20 million televisions, complete the second row of the table by calculating each of the values given this increase in demand. Country Aniva (tariff $3,000) Kartaly (quota 20 million televisions) Price (Dollars) Quantity Demanded at New Price (Millions of televisions) Imports (Millions of televisions) True or False: The increase in demand helps domestic producers but hurts domestic consumers in Kartaly. True False Which of the following explain why a tariff is a restrictive trade barrier than an equivalent quota. Check all that apply. Importers who are able to pay the tariff duty will get the product. An exporter can try to cut costs or slash profit margins. A tariff prevents domestic consumers from buying imports even if they are willing to pay a higher price. 4. A graphical comparison of tariffs and quotas Aniva and Kartaly are small countries that protect their economic growth from rapidly advancing globalization by limiting the import of televisions to 20 million. To this end, each country imposes a different type of trade barrier when the world price (Pw) is $2,000. In Aniva, the government decides to impose a tariff of $3,000 per television; in Kartaly, the government implements a quota of 20 million televisions. Assume that Aniva and Kartaly have identical domestic demand (De) and supply (S) curves for televisions as shown on the following graph. Under these conditions, the price of televisions is $5,000 per television in each country. 10000 PRICE (Dollars per television) 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Do D₁ 20 30 40 50 60 70 60 QUANTITY (Millions of televisions) S K 90 100 ? Suppose that in both countries, demand for televisions rises from Do to D₁. Assuming Aniva keeps the tariff at $3,000 per television, complete the first row of the following table by calculating each of the values given this increase in demand. Assuming Kartaly maintains a quota of 20 million televisions, complete the second row of the table by calculating each of the values given this increase in demand. Country Aniva (tariff $3,000) Kartaly (quota 20 million televisions) Price (Dollars) Quantity Demanded at New Price (Millions of televisions) Imports (Millions of televisions) True or False: The increase in demand helps domestic producers but hurts domestic consumers in Kartaly. True False Which of the following explain why a tariff is a restrictive trade barrier than an equivalent quota. Check all that apply. Importers who are able to pay the tariff duty will get the product. An exporter can try to cut costs or slash profit margins. A tariff prevents domestic consumers from buying imports even if they are willing to pay a higher price.

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