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Explain the following barriers to trade - Leaving Cert Business - Question 9 - 2020
Question 9
Explain the following barriers to trade. (i) Tariff: (ii) Quota:
Worked Solution & Example Answer:Explain the following barriers to trade - Leaving Cert Business - Question 9 - 2020
Step 1
Tariff:
Answer
A tariff is a tax imposed on goods that are imported into a country from another country. This tax increases the cost of importing goods, making them more expensive for consumers and businesses. For example, in the context of Ireland, tariffs are applied to goods entering from outside the EU. The primary objectives of tariffs include:
- Enhancing government revenue by collecting taxes on imported goods.
- Protecting domestic industries from foreign competition by increasing the price of imported goods, thereby encouraging consumers to buy locally produced products.
Step 2
Quota:
Answer
A quota refers to a limit placed on the quantity of particular goods that can be imported into a country during a specified period. It restricts the volume of goods coming from specific countries. Quotas are primarily designed to:
- Protect domestic producers by limiting foreign competition and ensuring that a certain portion of goods in the market are produced locally.
- Manage supply and demand by controlling the amount of certain products available in the market, such as milk quotas, which limit the amount of milk that can be produced within a country.