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 increase the price of rice in the EU, making it more expensive for consumers. This would decrease the quantity demanded of rice, leading to a decrease in imports. As a result, the EU would collect tariff revenue on the imported rice, which could be used to offset any negative effects on domestic rice producers. The social loss may decrease, but it cannot be concluded from the given information. European rice producers may or may not decrease production depending on the level of the tariff. The price of long-grain rice would be higher with a tariff than if rice imports were completely banned, as the ban would result in no imports, and therefore no price increase due to a tariff.

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