2. To protect U.S. jobs in the agricultural equipment industry, Congress could i

Question

2. To protect U.S. jobs in the agricultural equipment industry, Congress could impose a specific tariff or persuade foreign producers of agricultural equipment to agree to a voluntary export restraint agreement a. Which of these two policies is likely to be less damaging to the U.S.? Explain. b. Which of these two policies is likely to be less damaging to the world as a whole c. What happens to the following under each of the two policies: Explain. i. The U.S. price of agricultural equipment ii. The quantity of imported agricultural equipment ii. The quality of imported agricultural equipment

Explanation / Answer

a. Specific tariff is less damaging to U.S. as it can be affordable to U.S. people.
b. Voluntary Export restraint agreement will affect the world as a whole, now the agriculture equipments will become expensive and most of the people cannot afford to buy it.

c (i)The U.S. price of agricultural equipments increases.
(ii) The quantity of imported agriculture equipments decreases. As now it becomes expensive

(iii) The quality of imported agriculture equipments also decreases as it now the people will start compromising with the quality so that they can stay in the market.

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