00:01
American apparel makers complained to congress about competition from china.
00:06
Congress decides to impose either a tariff or quota on apparel imports from china.
00:11
Which policy would chinese apparel manufacturers prefer? so they would prefer a quota.
00:18
China would most likely prefer a quota as opposed to a tariff.
00:22
To domestic consumers, a tariff would produce a better economic outcome than a quota.
00:27
A tariff will help protect domestic firms and will generate government revenue that can be used toward cutting taxes.
00:33
Or financing public goods and services.
00:37
A quota raises prices and the additional revenue doesn't go to the domestic country.
00:43
The quota will benefit the foreign producers, which is why they would prefer it.
00:47
So when a quota is in place, now we have a decreased supply, but our demand hasn't changed, and this is going to raise the price...