LO 9.

5
IMPORT QUOTA AND TARIFF
Adrian Haridz Anindita Dharmesti Athiyya Nabila Fadhil M. Hasyim Ali
 Import Tariff or Quota That
LO 9.5 Eliminates Imports
Import In a free market, the domestic
Elimination price equals the world price Pw.

the imposition A total Qd is consumed, of

of tariffs which Qs is supplied
domestically and the rest
Quota imported.
Application
P0 When imports are eliminated,
Example : the price is increased to P0.
Sugar A B C
The gain to producers is
Quota Pw trapezoid A.
The loss to consumers is A + B +
C, so the deadweight loss is B +
C.

Qs Q0 Qd
 TARIFF
LO 9.5 - Assumption :
Under free trade, domestic
Import prices will equal world prices
Elimination
(Pw)
the imposition - Import :
of tariffs Qd-Qs
Quota - Consumer Surplus :
Application P*
-A B C D
Example : A D
B C - Produsen Surplus :
Sugar
Quota Pw A
- Government Revenue :
D
- Total Change in Welfare :
-B-C
Qs Qs Qd Qd
 Quota
LO 9.5 - Consumer & Producer
Surplus :
Import Will be the same with the tariff
Elimination
decision
the imposition
of tariffs - No government Revenue :
The revenue generates by D area
Quota will go to the foreign producers
Application P*
Example : A D
B C
Sugar
Quota Pw

Qs Qs Qd Qd