The Difference Between the Effect of an Import Quota When

question 161

Multiple Choice

The difference between the effect of an import quota when quota rights are given away and the effect of a tariff is that

• A)only the tariff results in a higher domestic price
• B)only the quota decreases the amount of goods imported
• C)the decrease in producer surplus is smaller with the quota
• D)under a quota, part of the decrease in consumer surplus is redistributed to foreign producers; under a tariff, it is redistributed to the domestic government
• E)under a tariff, part of the decrease in consumer surplus is redistributed to foreign producers; under a quota, it is redistributed to the domestic government

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Definitions:

Dutch Auction Underwriting

The type of underwriting in which the offer price is set based on competitive bidding by investors. Also known as a uniform price auction.

Competitive Bidding

A procurement process where suppliers submit bids to win a contract, ensuring transparency and fairness while possibly lowering costs.

Offer Price

The price at which a seller is willing to sell a security or asset, often differing from the bid or purchase price offered by a buyer.

Underwriters

Financial specialists who assess and take on certain risks by guaranteeing to pay a certain amount for securities offered by a corporation or government.