Tariffs and Import Quotas Have the Following Differing Outcomes

question 77

Multiple Choice

Tariffs and import quotas have the following differing outcomes:

• A)import quotas do not create deadweight losses but tariffs do
• B)tariffs help domestic consumers and import quotas help domestic producers
• C)tariffs raise revenue for the government but import quotas create a surplus for import licence holders
• D)tariffs increase prices but import quotas do not.

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Definitions:

Diminishing Marginal Utility

The principle that as a consumer consumes more of a good or service, the additional satisfaction gained from consuming an additional unit decreases.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite to what is observed with normal goods.

Diminishing Marginal Utility

The principle that as a person consumes more of a good, the satisfaction (utility) gained from consuming an additional unit decreases.

Total Satisfaction

The total amount of pleasure or utility that a consumer receives from consuming a certain quantity of goods or services.