Which Type of Policy Instrument Raises the Most Revenue for the Government

question 4

Multiple Choice

Which type of policy instrument raises the most revenue for the government?

• A)A quota
• B)Voluntary export restraints
• C)A tariff
• D)If they are set at the same level,all of the above raise the same amount of revenue.
• E)None of the above answers is correct because none of the policy instruments raise revenue for the government.

---

Definitions:

Marginal Revenue

The financial gain achieved through the sale of one more unit of a good or service.

Average Total Cost

The cost per unit of output, calculated by dividing the total cost of production by the total quantity of output.

Marginal Cost

The cost added by producing one additional unit of a product or service, crucial for making efficient production and pricing decisions.

Marginal Revenue

The supplementary earnings obtained through the sale of an additional product or service unit.