Suppose the United States auctioned off all import quotas,the auctions were perfectly competitive,and the government received the revenues from the auction.In this case,the deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff.

Question

Quizplus · Accepted Answer

When the United States auctions off all import quotas in a perfectly competitive market and receives the revenues, the economic effect is similar to that of a tariff. In both cases, the government collects revenue, either through tariffs or through auction proceeds. This means that the deadweight loss, which is the loss of economic efficiency when the equilibrium outcome is not achieved, would be the same for both a quota and an equivalent tariff, assuming other conditions are equal.

Suppose the United States Auctioned Off All Import Quotas,the Auctions