ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Tariffs provide a country with extra revenue and they offer protection to domestic producers by causing imported items to become more expensive. Quotas are more effective in restricting trade than tariffs, especially if domestic demand for something is not price-sensitive.

Detailed explanation-2: -The main objective of tariffs and quotas is to protect the domestic industries and jobs from high foreign competition because most commodities imported into countries are usually cheaper because of their low production costs.

Detailed explanation-3: -A tariff raises revenue for the government. A quota generates no government revenue. All the benefits of a quota go to protected domestic producers and to those imports who manage to get the scarce and valuable import permits used with quotas.

Detailed explanation-4: -Because a tariff is a tax, the government will see increased revenue as imports enter the domestic market. Domestic industries also benefit from a reduction in competition, since import prices are artificially inflated.

Detailed explanation-5: -Tariffs hurt consumers because it increases the price of imported goods. Because an importer has to pay a tax in the form of tariffs on the goods that they are importing, they pass this increased cost onto consumers in the form of higher prices.