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4 Comments
ashleighb_xox
a quota is a limit of the inports coming into the country while a tariff is a tax imposed on the imports for coming into the country
IIG2019
IIG2019
A quota is a government imposed trade restriction which limits the quantity of a good that can be imported into a country, where as a tariff is a tax imposed by the government on imports coming into the country. Just a side note, these are form of protectionism. All governments want their people to buy goods and services produced within their country (domestic market) as this creates employment and supports the local economies ect.
IIG2019
IIG2019
For example: An Irish chicken soup factory they want to maximise their profits, however the only way they can do so is to minimise their costs of producing their good. Irish Chicken is their main ingredient and each chicken costs €10, even if they bulk buy the cost will still be high. They seek to find cheaper chicken and see that Brazilian Chicken is only a fraction of the costs, let’s say €6 per chicken. And irrespective to transport costs, they see that they can now reduce their costs considerably. Therefore, they import it, this however Irish Chicken Farmers are unable to compete with the Brazilian prices, therefore they now have lost out in domestic trade, meaning they are unable to support themselves in the long run. This is where tariffs come in, the Irish Government decides to impose a 60% tariff on Brazilian Chicken, this as a result makes the cost of a Brazilian chicken become €9.6, which now the Irish Soup factory decides to just source it locally as importing the chicken won’t benefit them as much, they could import it and earn an extra small margin of profit but its not worth it, therefore the tariff has protected internal trade. A quota has a similar concept to this
Dehantschutter
a quota is a limit on the amount of foreign imports into a country , so eventually customers will have no choice but t buy irish products: but a tariff is a tax that is imposed on all the imports that enter the country , so that foreign imports cost more, and customers are more inclined to buy irish products(which have no tariff) therefore cheaper. Ethan.
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