Question

Suppose that Japan is considering placing trade restrictions on imports of U.S. pharmaceuticals. It could choose either a tariff or a quota, which would be designed to reduce imports by the same quantity. Which of these groups would be indifferent between the tariff and the quota

Answer 1

Answer:

1) Japanese buyers of pharmaceuticals.

Instead of focusing on U. S pharmaceuticals, we can look for Japanese buyers of pharmaceuticals. The fact should be acknowledged that if both the policies result in the same quantity which is being imported, then the price paid by the Japanese buyers will be identical as well.

2) Japanese producers of pharmaceuticals.

If both policies are resulting in the same quantity of the import, then the Japanese producers should be indifferent to which trade restriction is selected.