The Figure Below Shows the Demand (D) and Supply (S)

question 72

Multiple Choice

The figure below shows the demand (D) and supply (S) curves of corn syrups.Figure 21.3

-The basic difference between a tariff and quota is that:

• A)a quota can be imposed both on imports and exports, whereas a tariff can be imposed only on imports.
• B)a quota yields revenue to the government, whereas a tariff does not yield any revenue.
• C)a 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)a tariff is a quantitative restriction on imports, whereas a 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:

Forgone Rent

The potential income lost by choosing to use a property or resource in a way that is not financially optimal or by not using it at all.

Economic Profits

The surplus generated from business activities after accounting for both explicit and implicit costs, including opportunity costs, representing above-normal returns.

Explicit Costs

Direct, out-of-pocket payments for costs of production, such as wages, rent, and materials, that a company incurs in conducting its business.

Implicit Costs

Costs that represent the opportunity cost of using resources that a business already owns, rather than explicit outlays of cash.