A tariff and an import quota will both:
A)increase the quantity of imports and raise domestic price
B)increase the quantity of imports and lower domestic price
C)reduce the quantity of imports and raise domestic price
D)reduce the quantity of imports and lower domestic price

Question

Quizplus · Accepted Answer

A tariff is a tax on imports, which raises the cost of importing goods into the country. An import quota is a limit on the quantity of a good that can be imported into the country. Both of these policies restrict the flow of imports and raise the cost of imported goods. This reduces the quantity of imports and raises domestic prices, making domestic producers more competitive. Therefore, option C) reduce the quantity of imports and raise domestic price, is the correct answer.

A Tariff and an Import Quota Will Both