Tax on imports is one type of trade barrier. The government could also place a limit on the number of goods that can be imported. This is known as quotas. Can you explain, using the example of the Chinese toys, how quotas can be used as a trade barriers? Do you think this should be used?

Taxes on import and setting of quotas are the forms of trade barrier that the government can use to regulate foreign trade. In case of Chinese toys government for instance,

a. Can put a limit on the number of toys to be imported from China.
b. It will determine only how much amount of Chinese goods/toys can enter the Indian market.
c. This will increase the price of Chinese toys in Indian market.
d. It will reduce the import of Chinese toys.

Government can use such a measure in order to :

a. Provide protection to Indian toy makers.
b. Indian toy makers will prosper in such a scenario.
c. It will create market for Indian goods as well.
d. It will create healthy competition.

 

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