Mgt211 GDB Solution
Tuesday, November 06, 2012 Edit This
Q.1: You are required to evaluate the effects of relaxed import policy regarding import of used cars on local
Automobile industry (identify at least three (03) effects?
Solution:
A. In general: If import duty reduces then economy will destroy. Because manufacturing unit will close. People purchase imported items on low price and Pakistani goods are not sold mean company closed.
Explanation: The levying of tariffs is often highly politicized. The possibility of increased competition from imported goods can threaten domestic industries. These domestic companies may fire workers or shift production abroad to cut costs, which means higher unemployment and a less happy electorate.
B. A government may levy a tariff on products that it feels could endanger its population. For example, South Korea may place a tariff on imported beef from the United States if it thinks that the goods could be tainted with disease.
C. The use of tariffs to protect infant industries can be seen by the Import Substitution Industrialization (ISI) strategy employed by many developing nations. solution copied from vu solutions dot com The government of a developing economy will levy tariffs on imported goods in industries in which it wants to foster growth.
Q.2: You are required to evaluate the effects of relaxed import policy regarding import of used cars on economy (identify at least two (02) effects)?
SOLUTION:
A. Import duty is a income of Pakistan Govt. When relaxation is made on the import duty. Its mean income of the govt. will automatically decrease.
B. Purchasing power of the economy will automatically increase. Because cast will decrease. For example: If import duty will 20% then cost will be 1,000 but after relation like 10% in import duty. Cost will automatically decrease like 800.
