During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

Question

Quizplus · Accepted Answer

The best policy for raising tax revenue from coffee imports is to impose a tariff on imported coffee. A tariff is a tax on imported goods, and it would increase the price of imported coffee, resulting in higher revenue for the government. A subsidy on imported coffee would lower the price for consumers and reduce tax revenue. Voluntary export restraints and quotas limit the amount of imported coffee, which could result in shortages and higher prices, but they do not directly generate revenue for the government.

During the First 6 Months of 2008, the United States