If a tariff and an import quota lead to equivalent increases in the domestic price of steel,then:

Question

Quizplus · Accepted Answer

If the price increase is equivalent, then both policies will result in reduced imports and increased domestic production. This means that both policies will lead to the same amount being produced and consumed domestically. The impact on income distribution will depend on factors such as the elasticity of demand and supply, but both policies will have the same impact on production and consumption. As for efficiency, it is impossible to say which policy is more efficient without knowing more about the specific market conditions and trade-offs involved.

If a Tariff and an Import Quota Lead to Equivalent