A Major Difference Between Tariffs and Import Quotas Is That

question 245

Multiple Choice

A major difference between tariffs and import quotas is that

• A)tariffs create deadweight losses,but import quotas do not.
• B)tariffs help domestic consumers,and import quotas help domestic producers.
• C)tariffs raise revenue for the government,but import quotas create surplus for those who get the licenses to import.
• D)All of the above are correct.

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Definitions:

Contribution Margin

The revenue remaining after deducting variable costs, which contributes to covering fixed costs and generating profit.

Direct Manufacturing Cost

Expenses directly associated with the production of goods, including direct materials and direct labor costs.

Indirect Manufacturing Cost

Costs related to production that are not directly tied to a specific product, such as maintenance, supervision, and utilities.

Incremental Manufacturing Cost

The additional cost incurred for the manufacturing of one more unit of a product.