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Distinguish between a Quota and a Tariff as barriers to free trade between countries. - Leaving Cert Business - Question 8 - 2010
Question 8
Distinguish between a Quota and a Tariff as barriers to free trade between countries.
Worked Solution & Example Answer:Distinguish between a Quota and a Tariff as barriers to free trade between countries. - Leaving Cert Business - Question 8 - 2010
Step 1
Quota: Definition and Impact
Answer
A quota is a physical restriction or limit on the number of units of a good that may be imported or exported. It serves to discourage imports and/or encourage sales of domestically produced goods by limiting the availability of foreign products in the market.
Step 2
Tariff: Definition and Impact
Answer
A tariff is a tax imposed on the value or price of goods that are imported. This tax increases the cost of imported goods, making them more expensive and consequently less competitive compared to domestically produced goods. As a result, tariffs can protect local industries by discouraging consumers from purchasing foreign products.