When the United States imposes an import quota on a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus.

Question

Quizplus · Accepted Answer

When the U.S. imposes an import quota, it reduces the quantity of imports, leading to higher prices for consumers and a decrease in consumer surplus. The decrease in consumer surplus is typically larger than the increase in producer surplus because the quota creates a deadweight loss in the market, which is the loss of total welfare that is not offset by gains to producers or the government.

When the United States Imposes an Import Quota on a Good