In 2006, the European Union (EU) threatened to ban imports of long- grain rice because traces of genetically modified rice were found mixed in to commercial supplies. Instead of a ban, suppose the EU placed a tariff on the import of long- grain rice. Which of the following would be an outcome of this tariff?

Question

Quizplus · Accepted Answer

If the EU placed a tariff on the import of long-grain rice, it would generate tariff revenue for the EU. This would be a benefit for the EU government, which would be collecting the revenue. The other choices are not necessarily outcomes of the tariff. The price of long-grain rice in the EU may or may not be higher with a tariff, depending on the level of the tariff and the elasticity of demand for rice. European rice producers may or may not decrease production, depending on whether the tariff makes it more profitable for them to produce rice. The social loss may or may not decrease, depending on the level of the tariff and the elasticity of demand for rice.

In 2006, the European Union (EU) Threatened to Ban Imports