The Importers of a Good May Prefer a Quota Over

question 125

Multiple Choice

The importers of a good may prefer a quota over a tariff because

• A) a quota generates additional profits for importers.
• B) a tariff, but not a quota, generates additional profits for importers, not the government.
• C) the government gives subsidies to those who import from other countries.
• D) a quota may have more loopholes in its implementation than a tariff.

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Annuity

A financial instrument that provides a consistent series of payments to a person, often utilized as a source of income for retired individuals.

Equivalent Cash Flows

Streams of equal value cash flows occurring at regular intervals.

Hurdle Rate

The minimum rate of return on a project or investment required by a manager or investor to proceed with the project.