Question

Who gains and who loses when a country imposes a tariff or a quota on imports of a​ good? Suppose the United States imposes a tariff or quota on sugar imports. For each of the​ following, enter the letter G if it will gain from the tariff or quota or enter the letter L if it will lose from the tariff or quota. Domestic sugar producers and their workers ▼ G L Consumers ▼ G L Industries that use sugar and their workers ▼ G L The U.S. economy ▼ G L

Answer 1

Answer:

1. Domestic sugar producers and their workers GAIN because they can sell their products at higher prices and therefore make higher profits.
2. Consumers LOSE because they will pay a higher price for sugar and other products that use sugar as a key input, e.g. candy
3. Industries that use sugar and their workers LOSE because they need to pay higher prices for a key input like sugar.
4. The U.S. economy LOSE because it reduces jobs in other industries that use sugar as a key input, e.g. candy industry, bakeries, pharmaceuticals, beer brewers, etc. (a lot of industries use sugar in their manufacturing processes). When jobs are reduced, the whole economy suffers since consumption falls and social costs increase.