A Government Can Impose an Import Quota or an Equivalent

question 177

Multiple Choice

A government can impose an import quota or an equivalent tariff that achieves the same impact on trade. What is the key difference in the welfare outcomes of these two policy options?

• A) The domestic quantity supplied is larger under the tariff policy.
• B) The domestic price is higher under the tariff policy.
• C) The domestic price is lower under the tariff policy.
• D) The government captures some of the profits from foreign suppliers through the tariff revenue.

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Definitions:

Impossibility of Performance

A legal concept where a party cannot fulfill their contractual obligations due to unforeseen and uncontrollable circumstances.

Subject Matter

The topic, content, or substance that is being discussed or dealt with in a legal document, conference, or case.

Illegal

An action, item, or behavior prohibited by law and subject to penalties upon violation.

Consequential Damages

Financial losses suffered as a consequence of a breach of contract, beyond the immediate scope of the direct damages, not always recoverable under certain contracts.