The Basic Difference Between a Tariff and Quota Is That

question 71

Multiple Choice

The basic difference between a tariff and quota is that:

• A)quota can be imposed both on imports and exports whereas a tariff can be imposed only on imports.
• B)quota yields revenue to the government whereas tariff does not yield any revenue.
• C)tariff reduces the import of the goods with greater certainty than quota as the amount of import restricted by quota depends on the price elasticity of demand for importable.
• D)tariff is a quantitative restriction on imports whereas quota is an import duty.
• E)a tariff raises the price of the product only in the domestic market whereas with a quota,both domestic and foreign producers receive a higher price.

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Definitions:

Section 1231

A tax provision that allows for the preferential tax treatment of gains and losses on the sale or exchange of business property and assets held for more than one year.

Depreciation

An accounting method used to allocate the cost of a tangible or physical asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

FMV

The Fair Market Value represents the price at which property would be sold in an open market scenario.

Unrecaptured 1250 Gain

A type of gain on the sale of depreciable real property that’s taxed at a different rate than other capital gains.