The U.S. sugar quota restricts the amount of sugar that can be imported, raising domestic prices. This benefits domestic sugar producers but results in higher costs for consumers, leading to an efficiency loss and a net welfare loss to the economy.

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The U.S.sugar Quota

Question 38

Multiple Choice

The U.S.sugar quota

A) generates government revenue.
B) does not result in an efficiency loss.
C) results in benefits to sugar producers that exceed the cost to consumers.
D) results in costs to consumers that exceed the benefits to sugar producers.
E) results in net welfare benefits to the U.S.economy.

Correct Answer: