Saturday 24 November 2012
Y11 Economics Task for today
Y11:
Here are your learning aims for today!
1) You must mark the 6 mark answers from last lesson. The markscheme and questions are here:
https://fronter.com/taaleem/main.phtml
They are in the Y11 Economics room - Resources - Markscheme.
2) You then need to visit this blog post:
http://www.tutor2u.net/blog/index.php/gcse-economics/comments/the-problem-with-using-tariffs
You need to answer the GCSE style questions after reading the article:
1. Explain two other protectionist policies available to the US. [4 Marks]
2. Explain why the US may have decided to impose a tariff. [4 Marks]
3. ‘Tariffs are the best way to protect a country from foreign competition.’ Do you agree with this statement? Give reasons for your answer. [6 Marks]
You need to then post your answers on the comment section!
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1) Other examples of protectionist policies are quotas and subsidies. Quotas put a physical limit on the amount of goods that are imported into a country allowing domestic producers to dominate more of the market. Subsidies are a form of funding from the government which reduce the production costs to a domestic producer allowing them to gain more profits that can be used to invest further in their products. Alternatively they would be able to sell their good for a cheaper price compared to foreign goods which may result in an increase in demand.
ReplyDelete2)The US may have decided to place a tariff on importation to protect domestic producers and allow them to have a larger share of the market. In addition it means that foreign goods will be more expensive and so consumers may choose to buy the cheaper domestic good instead. It will also increase government revenue from taxation which can be used to increase the living standard in the country.
3)Tariffs are an effective way of protecting a country from foreign competitors as it makes it harder for them to sell their good. It also increases their production costs which causes them to increase their prices. Domestic producers will benefit from this as demand may increase as they will become the cheaper alternative.
However, tariffs may cause conflict between countries and they may put up a tariff to protect their domestic producers. This means exportation for that good will be more expensive resulting in a decrease in exportation. A better method of protecting domestic producers is through the method of subsidization as it allows domestic producers to decrease their prices and become the cheaper alternative in that sense without harming international relations.
Overall, tariffs are a good method of protecting domestic producer as long as the country does not take offence from it or see it as an attack on their trade.
Other than tariffs, administrative barriers and quotas are available to the US. Administrative barriers are a form of quality control that ensure that imported goods comply with a specific standard making it more difficult for international producers to import. Quotas impose a physical limit on the amount of goods a producer can import, this increases the price of goods as there is not enough supply to meet demand.
ReplyDeleteThe US may have decided to impose a tariff to decrease foreign competition, thus giving domestic businesses an advantage in the market where they may be competing with more developed producers. However they may have also done this to increase tax revenue as the imported goods may be inelastic, therefore people will continue to buy them despite the increase in price.
While tariffs are generally a safe way to decrease competition, this is because consumers usually opt for the cheaper product. However this is not always the case as factors that shift demand such as advertising and tastes and fashion can direct demand towards the foreign products again. Because of this it may be better to enforce a quota, limiting the physical limit of imported goods on the market meaning that consumers will have to purchase domestic products after the stock of the foreign product has been exhausted. However the government does not receive any money from this as they would do from the purchasing of imported goods when a tariff has been enforced.
Good stuff...keep them coming!!
ReplyDelete1) One other protectionist policy the US may decide to put in place is the use of Quotas, this places a physical limit on the amount of goods a company can export to said country. This will lower he supply of the good and thus increasing its price, forcing companies to switch to domestic producers instead in order to keep costs down and though this,protecting domestic industries.
ReplyDeleteAnother way the Us can protect its industries is by offering subsidies to domestic producers, this is financial support in the form of grants or tax breaks. This will allow the companies to decrease their production costs and thus increase supply, lowering the cost of their products and giving them a competitive edge over
foreign suppliers.
2)The United States may have decided to place a tariff on Chinese tires for a number of reasons, one of these may be to protect jobs in their country, as domestic suppliers face fierce competition from foreign exports that can sell their goods at a far lower price, decreasing demand for the American made products and this causing the loos of jobs. Another factor may have been to raise tax revenue, the country is faced with a massive deficit and be in desperate need of more tax revenue, and this provides a fairly steady flow of income, especially if the tariff is placed on inelastic goods.
3) Tariffs are the placing of taxes on foreign exports to make them more expensive, there are a number of advantages to doing tariffs instead of subsidies and quotas. One such advantage is that tariffs raise tax revenue for the country that can be used to promote growth and domestic producers whereas subsidies cost a lot of public money and quotas raise nothing. Further they may be seen as less aggressive than quotas and thus the country may be less likely to face retaliation from other countries and start a trade war which may significantly hurt demand for US products. Another advantage is that they will almost always increase demand for the domestic producers products as foreign goods become significantly more expensive and consumers will be forced to switch. However the effectiveness of tariffs will always depend on the elasticity of the product type, if it is a very inelastic market then domestic producers may not face as much of an increase in demand as consumers decide to stick to foreign exports due to brand loyalty or superior quality. Overall I believe they are, in most cases the most effective protectionist policy due to the moderately lower chance of trade disputes and increase of tax revenue.
1) Other forms of protectionist policies are quotas and subsidies. Quotas imply a physical limit on the amount of produce allowed into the country. This allows domestic markets to dominate the market as consumers will have to buy their products. Subsidies I the funding provided by the government to the local business. This allows the business to lower their costs resulting in a lowering price of the product. Alternately the business could use the money to improve the quality of their product. The government can then tax the consumers and so increase their budget used to spend back into the economy.
ReplyDelete2) The US could have imposed a tariff to help domestic markets dominate the economy. With the domestic products being cheaper, demand for them will be high and so they will be making the bigger profit. Once this profit is taxed, the government could use the money to improve the living standards of the people. The profit gained form the tariff can also be used by the government.
3) Tariffs are implying a fee on the imports which the governments makes a profit off. They are an effective method to allow domestic markets control the market. With a tariff implied the production costs for imports increases and so demand for the product decreases. This allows demand for cheaper, domestic alternatives to increase and so encourage economic growth within the country. However, tariffs can also ruin the relation between countries. If a tariff is implied then the exporting country could take offence to this and so impose their own protection policies. This could cause disputes and cause certain products to go scarce in the country. Overall, I believe that tariffs are the best protectionist policy as it doesn't not put a physical limit on how much is allowed in. As long as a fee is paid, the producer of the product is allowed to export as much as he wants without causing much dispute.