Problem 12
Draw a domestic supply-and-demand diagram for a product in which the United States does not have a comparative advantage. What impact do foreign imports have on domestic price and quantity? On your diagram show a protective tariff that eliminates approximately one-half of the assumed imports. What are the price-quantity effects of this tariff on \((a)\) domestic consumers, \((b)\) domestic producers, and \((c)\) foreign exporters? How would the effects of a quota that creates the same amount of imports differ? LO38.4
Problem 13
American apparel makers complain to Congress about competition from China. Congress decides to impose either a tariff or a quota on apparel imports from China. Which policy would Chinese apparel manufacturers prefer? \(L O 38.4\) a. Tariff. b. Quota.
