The main difference between a tariff and an import quota is that:

Question

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Tariffs generate tax revenue for the government, while import quotas create rents for the license holders who are granted the right to import a limited quantity of a particular good. Tariffs and import quotas both have the effect of reducing imports, so A and D are incorrect. B is also incorrect because the extent to which prices are raised by either policy depends on the specific circumstances of the market.

The Main Difference Between a Tariff and an Import Quota