A Key Difference Between a Quota and a Tariff Is

question 64

Multiple Choice

A key difference between a quota and a tariff is that

• A) a quota has a larger effect on quantity than on price.
• B) the government of the importing country gains revenue from a tariff, but the price gap caused by a quota benefits domestic importers.
• C) a tariff has a larger effect on quantity than on price.
• D) All of the above answers are correct.

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Definitions:

Perfectly Elastic

A situation in economics where the demand or supply for a good is completely responsive to changes in price, resulting in an infinite elasticity.

Mutual Interdependence

A situation in which a change in price strategy (or in some other strategy) by one firm will affect the sales and profits of another firm (or other firms). Any firm that makes such a change can expect its rivals to react to the change.

Trademarks

Symbols, names, or phrases legally registered or established by use as representing a company or product.

Product Differentiation

A strategy in which one firm’s product is distinguished from competing products by means of its design, related services, quality, location, or other attributes (except price).