Suppose the Government of an Importing Country Is Considering Imposing

question 3

Multiple Choice

Suppose the government of an importing country is considering imposing either a tariff that would result in imports falling to 1 million units per year or an import quota of 1 million units per year.Which of the following would be true?

• A)The domestic price of the imported good will rise higher with the tariff than with the quota.
• B)Consumers in the importing country will be worse off with the quota than with the tariff.
• C)Domestic producers that compete with the imports will be better off with the tariff than with the quota.
• D)The tariff will increase the revenue of the government of the importing country,while the quota will increase the profits of the foreign exporting firms with quota rights.
• E)Tariffs raise the price of a good but quotas do not.

---

Definitions:

Liabilities

Financial obligations or debts that an entity owes to others, which must be settled over time through the transfer of economic benefits.

Excise Tax

A tax imposed on specific goods, services, or transactions, often with the aim of reducing their consumption or raising government revenue.

Lung Cancer

A type of cancer that originates in the lungs, often associated with smoking and exposure to hazardous pollutants.

Benefits-Received Tax

A taxation principle where taxes are levied on individuals based on the benefits they receive from the government's use of the collected tax.