The Difference Between a Tariff and a Quota Is That

question 214

Multiple Choice

The difference between a tariff and a quota is that the

• A)government collects more revenue by imposing a quota.
• B)government collects no revenue by imposing a quota.
• C)producer and consumer prices are equal when a tariff is imposed, but different when a quota is imposed.
• D)producer and consumer prices are equal when a quota is imposed, but different when a tariff is imposed.
• E)tariff is more effective at restricting imports.

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Definitions:

Oligopolistic Models

Economic models that describe markets in which a few firms dominate, often leading to pricing and output decisions that consider the actions of competitors.

Cartel

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often in order to maximize the members' profits at the expense of consumers.

Herfindahl-Hirschman Index

A measure used to assess the market concentration and competition level within an industry, calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers.

Market Share

The portion of a market controlled by a particular company or product, indicative of competitiveness.