ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Import quotas offer another means of protectionism. These quotas set an absolute limit on the amount of certain goods that can be imported into a country and tend to be more effective than protective tariffs, which do not always dissuade consumers who are willing to pay a higher price for an imported good.

Detailed explanation-2: -Tariffs make imported goods more expensive, while quotas restrict the quantity of imported goods that are available. The purpose of a tariff is to protect domestic industries from foreign competition. The purpose of a quota is to protect domestic industries from foreign competition.

Detailed explanation-3: -In some cases, “tariff quotas” are used to strike a balance between market access and the protection of domestic industry. Tariff quotas work by assigning low or no duties to imports up to a certain volume (primary duties) and then higher rates (secondary duties) to any imports that exceed that level.

Detailed explanation-4: -Quotas will reduce imports, and help domestic suppliers. However, they will lead to higher prices for consumers, a decline in economic welfare and could lead to retaliation with other countries placing tariffs on our exports.