If a quota is set at the same quantity of imports that results from a tariff,
A)the deadweight loss from the tariff is greater than the deadweight loss from the import quota.
B)the deadweight loss from the tariff equals the deadweight loss from the import quota.
C)the deadweight loss from the import quota is greater than the deadweight loss from the tariff.
D)the government tariff revenue is greater than the importers' profit from the import quota.
E)the government tariff revenue is less than the importers' profit from the import quota.

Question

Quizplus · Accepted Answer

When a quota is set at the same quantity of imports that results from a tariff, the deadweight loss from the tariff equals the deadweight loss from the import quota because both policies reduce the quantity of imports to the same level, distorting the market in a similar manner.

If a Quota Is Set at the Same Quantity of Imports