Answer to Question #89629 in Economics for Ashley Beyer

Question

b. What happens to the following under each of the two policies (increase; decrease; or uncertain):
i. The U.S. price of agricultural equipment
ii. The quantity of agricultural equipment imported into the U.S.
iii. The quality of imported agricultural equipment

Answer 1

i. The U.S. price of agricultural equipment increases in case of tariff, and increases in case of quota.

ii. The quantity of agricultural equipment imported into the U.S. decreases in case of both tariff and quota.

iii. The quality of imported agricultural equipment is uncertain in case of either quota or tariff.