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 complete 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

Placing a tariff on the import of long-grain rice would increase the price of the rice in the EU, but not as much as if there was a complete ban on imports. Therefore, the price of long-grain rice in the EU would be lower with a tariff than if rice imports were completely banned, but higher than with free trade. This is because the tariff would make importing long-grain rice more expensive, reducing the quantity demanded and increasing the price. However, some long-grain rice would still be imported, so the price would not be as high as if all imports were banned.

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