If an import- competing firm is imperfectly competitive,than under free trade an import quota will domestic market price,_ _ producer surplus,_ consumer surplus, government revenue,and overall domestic national welfare.
A)decrease; increase; decrease; increase; decrease
B)increase; increase; decrease; have no effect on; decrease
C)have no effect on; have no effect on; decrease; increase; decrease
D)increase; have no effect on; decrease; increase; decrease
E)decrease; decrease; increase; decrease; have no effect on

Question

Quizplus · Accepted Answer

An import quota limits the quantity of goods that can be imported, reducing competition and allowing domestic firms to raise prices. This increases producer surplus but decreases consumer surplus. Government revenue is not directly affected by quotas, and overall welfare decreases due to inefficiencies and loss of consumer surplus.

If an Import- Competing Firm Is Imperfectly Competitive,than Under Free