With a quota,the __________ is greater than the __________.
A) loss in producers' surplus; gain in consumers' surplus
B) loss in consumers' surplus; loss in producers' surplus plus higher total revenues on the imported goods
C) loss in producers' surplus plus higher total revenues on the imported goods; consumers' surplus
D) tax; revenue
E) quota-determined price; quota-determined output

Question

Quizplus · Accepted Answer

With a quota, the quantity of imports is limited, causing a reduction in consumer surplus due to higher domestic prices and decreased availability of the imported good. This reduction in consumer surplus is greater than any gain in producers' surplus from the quota-determined price increase, as well as any total revenue increase from the limited quantity of imported goods. Therefore, there is a net loss in total surplus, consisting of the loss in consumer surplus and the loss in producers' surplus, plus any additional revenue from the imported goods.

With a Quota,the __________ Is Greater Than the __________

With a Quota,the Is Greater Than the