To enhance learning and to encourage fluency in current events, students are exp

To enhance learning and to encourage fluency in current events, students are expected to read about current events in business and to contribute pertinent international news articles and summaries.
During Week 5, you should seek about material that is pertinent to our eText Chapter 5: Nontariff Trade Barriers
Articles are to be selected from the business press. Suggested sources are listed on the weekly Required Current Events Readings page. The article should be no more than 3 months old.
Article selection must be made CAREFULLY – the topic of the article you select must tie with our assigned weekly chapter/topic.
The summary of the article should not go beyond one paragraph (about 5 sentences.) The article summary must be in your own words, not duplicated from the article.
Please also provide an opinion of the article or discuss what makes it important or interesting.
A cover page for this assignment is not necessary, but you must include a cited link in APA format to the article.
CHAPTER 5
Quotas versus tariffs
Previous analysis suggests that the revenue effect of absolute quotas differs from that of import tariffs. These two commercial policies can also differ in the impact they have on the volume of trade. The following example illustrates how, during periods of growing demand, an absolute quota restricts the volume of imports by a greater amount than does an equiva-lent import tariff. Figure 5.2 represents a hypothetical trade situation for the United States in autos. The U.S. supply and demand schedules for autos are given by U.S.0
S and D , and J0S represents U.S.0
the Japanese auto supply schedule. Suppose the U.S. government has the option of levying a tariff or a quota on auto imports to protect U.S. companies from foreign competition.
tariff-rate Quota: A two-tier tariff
Another type of import quota is the tariff-rate quota. The U.S. government has imposed this restriction on imports such as steel, brooms, cattle, fish, sugar, milk, and other agricul-tural products.
International price Discrimination
Consider the case of a domestic seller that enjoys market power as a result of barriers that restrict competition at home. Suppose this firm sells in foreign markets that are highly com-petitive. This scenario means that the domestic consumer response to a change in price is less than that abroad; the home demand is less elastic than the foreign demand. A profit-maximizing firm would benefit from international price discrimination, charging a higher price at home, where competition is weak and demand is less elastic, and a lower price for the same product in foreign markets to meet competition. The practice of identifying sepa-rate groups of buyers of a product and charging different prices to these groups results in increased revenues and profits for the firm as compared to what would occur in the absence of price discrimination Figure 5.5 illustrates the demand and cost conditions of South Korean Steel Inc. (SKS)
that sells steel to buyers in South Korea (less elastic market) and in Canada (more elastic market); the total steel market consists of these two submarkets. Let
D SK be the South
Korean steel demand and D be the Canadian demand, with the corresponding marginal revenue schedules represented by MR SK and MR , respectively. The SK C
C C SK C D 1 denotes
the market demand schedule, found by adding horizontally the demand schedules of the two submarkets; similarly,
MR 1 represents the market marginal revenue schedule.