If the import supply curve is upward sloping
A) A tariff can increase domestic aggregate surplus
B) A quota can increase domestic aggregate surplus
C) A tariff will decrease domestic aggregate surplus
D) A and B

Question

Quizplus · Accepted Answer

If the import supply curve is upward sloping, it means that as the quantity of imports increases, the price of imports also increases. In this case, both a tariff and a quota would reduce the quantity of imports and increase their domestic price. This would lead to an increase in domestic aggregate surplus due to a reduction in imports and an increase in the domestic price of the imported good. Therefore, both A and B are correct.

If the Import Supply Curve Is Upward Sloping