Question

You run a small community or country and your primary output is the growing of wheat and the sewing of socks. You are able to produce both products for a low cost, so your residents do not have to pay very much for these two products. One day, another country contacts you with the offer of the same products at an even lower price. If you allow them entry into your community, your residents will save money. However, those who run these businesses will be negatively affected. Assuming you do let them, sell in your community, which of the "controls" described in your textbook would you use to control the situation and why do you think this would work well?

Answer 1

Answer:Impose a high Import tariff

Explanation: A Tariff is a tax imposed on products imported into a country from another country,tariff is aimed at controlling the excess import of certain goods especially if a country has it own local producers of such products. It will also prevent the importing country from being a "dumping ground" for all sorts of products. By applying a high Import tariff,the producer will restrict by itself the quantity it will export into another country as Demand for the imported product will be affected by Increased price.