Evaluate each of the following statements. Include a statement on each of the fo

Question

Evaluate each of the following statements.

Include a statement on each of the following. Do NOT include a one work answer.

1.) A tariff on textiles is equivalent to a tax on consumers and a subsidy to the textile producers and workers.

2.) A tariff lowers the real income of the country, while at the same time it distributes income from the consumers to the governments and to the import-competing industires.

3.) Chinese mushrooms undersell American mushrooms because chinese labor is cheaper than American labor. We should impose a high tariff on mushrooms until China agrees to raise wage rates to the level prevailing in the US.

Explanation / Answer

1) yes a tarrif on texiles is equal to a tax on consumers and a subsidy to the textile producers and workers as in both the cases the diffrence between demand and supply is equal to the tax t or subsidy s , the regulations provided by government increases price for the consumers in one case but on the other case similarly the price charged by supplier is less as it is subsidized

2) yes true, for example a tax which government collects is the money which government spends on development of the country , also if there are import and export tariff regulations are better , as it would help country to bring the outer money more in the economy and cheaply use the goods whose production inside the country causes high input and capital

3) import tariff should be imposed so that american mushroom is produced at less prices rather than increasing or decreasing the wages of workers there, the problem for america is to sell their own mushroom and also to restrict from china, so import tariff would make the price of chinese mushroom high and the extra amount generated would reduce the price of american mushroom

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