The Effect of a Tariff or a Quota Is to

question 31

Multiple Choice

The effect of a tariff or a quota is to

• A)raise the price of a commodity in the exporting country above the price in an importing country.
• B)raise the price of a commodity in an importing country above the price in the exporting country.
• C)lower the price of the commodity in all countries.
• D)raise the price of the commodity in all countries.

---

Definitions:

Constant Returns

A situation in which the rate of increase in output is directly proportional to the increase in inputs in the production process.

Scale

The size or level of operation, indicating the scope or extent of something, often used in discussions of production or economic activities.

Production Function

An economic model that describes how output is created by varying inputs of production like labor and capital.

Technological Knowledge

Society’s understanding of the best ways to produce goods and services.