Are domestic consumers better or worse off after a large
Exporting country imposes an export quota?
A)Domestic consumers are better off, since there is a gain in consumer surplus.
B)Domestic consumers are worse off, since there is a loss of consumer surplus.
C)Domestic consumers are neither better nor worse off, since gains in consumer surplus are offset by losses of
Producer surplus.
D)Domestic consumers may be better or worse off, depending on the magnitude of terms of trade gains.

Question

Quizplus · Accepted Answer

When a large exporting country imposes an export quota, it restricts the amount of goods available for export, which can lead to an increase in the domestic supply of those goods. This increase in supply can lower domestic prices, resulting in a gain in consumer surplus for domestic consumers.

Are Domestic Consumers Better or Worse Off After a Large