Which of the following methods of restricting trade does NOT create a deadweight loss?
A) A quota
B) A tariff
C) A voluntary export restraint
D) Both answers A and B are correct.
E) None of the above answers is correct because all the methods create a deadweight loss

Question

Quizplus · Accepted Answer

All the mentioned methods of restricting trade (quotas, tariffs, and voluntary export restraints) create a deadweight loss by causing the market to be less efficient than it would be in a situation of free trade. Deadweight loss occurs because these measures distort market prices and quantities, leading to a loss of economic welfare.

Which of the Following Methods of Restricting Trade Does NOT