In a demand and supply diagram, the effects of a tariff and a quota on the supply and demand curves are identical.

Question

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While both a tariff and quota can lead to a decrease in supply and increase in price, their effects on the supply and demand curves are not identical. A tariff raises the price of imported goods, leading to a movement up the supply curve on the domestic side. A quota restricts the quantity of imports, shifting the supply curve to the left. As a result, the specific effects on the demand and supply curves may differ depending on the specific details of the tariff and quota implemented.

In a Demand and Supply Diagram, the Effects of a Tariff