Quotas are:
A)economically better than tariffs.
B)economically inferior to tariffs.
C)equivalent to tariffs if the government auctions off the limited supply of quota licenses to the highest bidders.
D)less likely than tariffs to generate retaliation from trading partners.
E)never used.

Question

Quizplus · Accepted Answer

Quotas can be equivalent to tariffs if the government auctions off the limited supply of quota licenses to the highest bidders. This is known as a quota rent and generates revenue for the government, similar to how tariffs generate revenue through a tax on imports.

Quotas Are