Please answer all three and don\'t cut and paste from other answers on chegg. I
ID: 1186902 • Letter: P
Question
Please answer all three and don't cut and paste from other answers on chegg. I wouldn't be doing this if they were good answers.1. Describe both quotas and tariffs. How do they impact domestic prices and deadweight loss? How does an import quota differ from an equivalent tariff? What is best for a nation as a whole: a tariff, a quota, or free trade? Explain your answer.
2. Give an example of a positive and a negative externality. Would a Coasean solution resolve the economic efficiency of the externalities you cites? Why or why not?
3. The Coase theorem suggests that efficient solutions to externalities can be arrived at through bargaining. Under what circumstances does this fail to produce a solution? Please answer all three and don't cut and paste from other answers on chegg. I wouldn't be doing this if they were good answers.
1. Describe both quotas and tariffs. How do they impact domestic prices and deadweight loss? How does an import quota differ from an equivalent tariff? What is best for a nation as a whole: a tariff, a quota, or free trade? Explain your answer.
2. Give an example of a positive and a negative externality. Would a Coasean solution resolve the economic efficiency of the externalities you cites? Why or why not?
3. The Coase theorem suggests that efficient solutions to externalities can be arrived at through bargaining. Under what circumstances does this fail to produce a solution?
Explanation / Answer
1) Quotas - quotas can be of different types like sale ,production and export quotas. An import quota is a limit on the quantity of a good that can be produced abroad and sold domestic .
Sales quota, a minimum sales goal for a set time span.
Production quota, a numerical goal for the production of a good
Tariff - is either (1)a tax on imports or exports (an international trade tariff), or (2)a list of prices for such things as rail service, bus routes, and electrical usage (electrical tariff, etc.).[1] The meaning in (1) is now the more common meaning. The meaning in (2) is historically earlier. The meaning in (1) developed from a tabular list of tax rates for different import goods.
IMPORT VS EQUIVALENT- . An import quota is a limit on the quantity of a good that can be produced abroad and sold domestic -------- A TARIFF equivalent discourages imports and promotes domestic industries and companies. Examples of tariff equivalents include import quotas or licensing restrictions.
For a nation as a whole FREE TRADE is the best. As we look at the countries that do not provide free trade are generally underdeveloped. And those who do like America are more prospurous. Quotas and tariffs provide restrictions to business and a lot of taxes which is not helpful for the business. Free trade dosen't provide restrictions hence is better.
2) Example of a POSITIVE externality that is derived from consumption is Education, and that from production is R&D. When society receives better education, this in turn will benefit the country as a whole as more foreign direct investments will flow into the country, thus increasing employment and income. When a company engages in R&D, the discovery of new production technology can be adopted by other firms in the industry.
Example of a NEGATIVE externality that results from consumption is road congestion, and that from production is pollution. When society consume the "usage of roads", it will come to a point beyond which additional road user (driver) will cause third parties to incur some costs as the road started to get congested. When this happens, the employers of these drivers will suffer productivity loss due to them coming in late. When firms engage in the production of goods in their manufacturing plants, hazardous gases may be released into the atmosphere, thus leaving the society having to bear the brunt of additional medical costs.
YES IT WOULD----------
In law and economics, the COASIAN THEORUM (pronounced /?ko?s/), attributed to Nobel Prize laureate Ronald Coase, describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. In practice, obstacles to bargaining or poorly defined property rights can prevent Coasian bargaining.
3) In many cases of externalities, the parties might be a single large factory versus a thousand landowners nearby. In such situations, say the critics, not only do transaction costs rise extraordinarily high, but bargaining is hindered by the basic incentive to free-ride and poorly defined property rights