In Which of the Following Cases Does an Import Quota

question 20

Multiple Choice

In which of the following cases does an import quota result in a higher welfare loss than a tariff?

• A)The domestic firms producing an import-competing product set the product's price equal to the marginal cost of producing it.
• B)The government auctions the import licenses to the highest bidders.
• C)The quota licenses are allocated through resource-using application procedures.
• D)The domestic industry in the importing country is highly competitive.