Similar to import tariffs import quotas tend to result in ?
Correct answer: A. higher prices and reduced imports
- A. higher prices and reduced imports
- B. increased government revenue
- C. increased consumer surplus
- D. decrease producer surplus
Explanation
An import quota restricts supply from abroad, pushing the domestic price upward and reducing the quantity imported. Unlike a tariff, it does not necessarily generate government revenue because the quota rents may go to licence holders.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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