Which of the following is false?
A) An import quota does not generate government revenue.
B) Tariffs on imports generate government revenue as long as the domestic price is larger than the world price plus the tariff.
C) Tariffs on imports do not generate government revenue if the domestic price is larger than the world price plus the tariff.
D) Tariffs on imports generate revenue for the government.

Question

Quizplus · Accepted Answer

Tariffs on imports generate government revenue by imposing a tax on imported goods, regardless of the domestic price relative to the world price plus the tariff. The statement in C is false because tariffs generate revenue for the government even if the domestic price is higher than the world price plus the tariff, as the revenue comes from the tax on the imported goods themselves, not from the price differential.

Which of the Following Is False