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.

Question

Quizplus · Accepted Answer

Tariffs impose a tax on imported goods, which increases their price and creates deadweight losses. Import quotas restrict the quantity of imported goods, leading to higher prices and profits for domestic producers and imports that fetch a premium price in the market. Tariffs generate revenue for the government, whereas import quotas create rent for license holders who have the authority to import. Therefore, option C is the correct choice.

A Major Difference Between Tariffs and Import Quotas Is That