Question

Distinguish between Tariffs and Quotas.

Hint:

Tariffs = Price barrier; Quotas = Quantity barrier. Both restrict imports but in different ways.

Answer 1

Tariffs	Quotas
Tariffs are taxes imposed on imported goods.	Quotas are physical limits on the quantity of goods that can be imported.
They raise the price of imported goods, making them less competitive.	They restrict the supply of imports directly, regardless of price.
Generate revenue for the government.	Do not generate any direct revenue.
Allow importers to continue importing if they pay the higher cost.	Completely block imports once the quota limit is reached.
Example: 10% customs duty on imported mobiles.	Example: Import limit of 1 lakh tonnes of sugar in a year.