Compared to an Import Quota,an Equivalent Tariff May Provide a Less

question 22

Multiple Choice

Compared to an import quota,an equivalent tariff may provide a less certain amount of protection for home producers since:

• A) A tariff has no deadweight loss in terms of production and consumption
• B) Foreign firms may absorb the tariff by offering exports at lower prices
• C) Tariffs are effective only if home demand is perfectly elastic
• D) Quotas do not result in increases in the price of the imported good

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Definitions:

Midpoint Method

The midpoint method is a technique used in economics to calculate the elasticity of a variable by dividing the percentage change in the quantity demanded or supplied by the percentage change in price, using the midpoint between two values as the base of calculation.

Price Elasticity

An evaluation of demand sensitivity to price variations for a given item.

Mad Cow Disease

A fatal neurodegenerative disease in cattle that can be transmitted to humans, causing a variant of Creutzfeldt-Jakob Disease.

Ground Beef

Beef that has been finely chopped by a meat grinder or a similar tool, often used in cooking various dishes.