How will an export quota imposed by a large exporting
Country affect the country's welfare?
A)It will cause an increase in the country's welfare if the terms of trade gain exceed consumption and production
Deadweight losses.
B)It will always a decrease in the country's welfare.
C)It will always cause an increase in the country's welfare.
D)It will not change the country's welfare.

Question

Quizplus · Accepted Answer

If the terms of trade gain from the export quota exceed the deadweight losses, then the country's welfare will increase. However, if the deadweight losses are greater than the terms of trade gain, then the country's welfare will decrease. Therefore, it depends on the specific situation of the export quota imposed.

How Will an Export Quota Imposed by a Large Exporting