Which of the Following Is True Concerning the Impact of Tariffs

question 124

Multiple Choice

Which of the following is true concerning the impact of tariffs and quotas?

• A)Tariffs raise the price of a good but quotas do not.
• B)Tariffs reduce consumer and producer surplus whereas quotas reduce domestic consumer surplus and increase domestic producer surplus.
• C)Both tariffs and quotas increase the quantity demanded.
• D)The revenue resulting from a tariff goes to the government whereas the revenue resulting from a quota goes to whoever is awarded the right to sell the product.
• E)The potential welfare loss is greater with tariffs than quotas.

---

Definitions:

Gross Domestic Product

A measure of the market value of all final goods and services produced in a country during a specific period, illustrating the size of its economy.

Unpaid Volunteer

An individual who offers services by choice without receiving monetary compensation for their work.

Value Added

Value added refers to the additional value created at each stage of production or service, calculated as the sales revenue minus the cost of raw materials and intermediate goods.

Raw Materials

The basic substances or components that are processed or refined to create goods and products.