For the government, a quota is worse than a tariff because part of the lost _____ surplus is not transferred to the government.

Question

Quizplus · Accepted Answer

A quota leads to a loss in consumer surplus because it restricts the quantity of goods that can be imported, raising prices and reducing the choices available to consumers. Unlike a tariff, which generates revenue for the government, a quota typically does not transfer any part of the lost consumer surplus to the government, making it less favorable from a government revenue perspective.

For the Government, a Quota Is Worse Than a Tariff