An import quota is similar to a ________ in its effect on imports, EXCEPT that an import quota ________.
A) tariff; does not generate revenue
B) tariff; generates revenue
C) subsidy; does not generate revenue
D) subsidy; generates revenue
E) tariff; does not result in an efficiency loss.

Question

Quizplus · Accepted Answer

An import quota and a tariff both limit imports, but a tariff generates revenue for the government while an import quota does not. Thus, an import quota is similar to a tariff in its effect on imports, except that it does not generate revenue. The other answer choices are not correct because they involve subsidies or efficiency loss, which are not related to import quotas.

An Import Quota Is Similar to a ________ in Its