A Difference Between a Quota and a Tariff Is That

question 143

Multiple Choice

A difference between a quota and a tariff is that

• A) a tariff generates a higher price than does a quota.
• B) a quota increases profits of domestic producers more than does a tariff.
• C) a tariff generates a greater reduction in exports than does a quota.
• D) the government collects revenues from a tariff but does not collect revenues from a quota.

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Definitions:

Consumer Surplus

The split between the comprehensive sum consumers are prepared to offer for a good or service and the sum they truly pay.

Demand Curve

A graphical representation that illustrates the relationship between the price of a good and the quantity of it that consumers are willing to buy.

Equilibrium Price

The price at which the quantity of goods suppliers are willing to sell equals the quantity consumers are willing to buy, leading to a balance of demand and supply.

Consumer Surplus

The variance between a consumer's maximum price readiness for a product or service and the real payment made.