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

A tariff on imports would increase the price of long-grain rice in the EU compared to a situation of free trade, as the cost of the tariff is typically passed on to consumers. However, it would not be as high as if a complete ban were in place, which would severely restrict supply and likely drive prices up more significantly.

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