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.

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Definitions:

Propinquity

The tendency for people to form close relationships or feel a sense of attraction with others who are geographically close or frequently encountered.

Unbalance

A state of lack of equilibrium or stability, either physically, emotionally, or in terms of a system or situation.

Acquiescence

The act of agreeing or consenting without protest, often with little enthusiasm or conviction.

Homeostasis

The ability of a living organism to maintain stable internal conditions despite changes in external environments.