Like tariffs, quotas result in:

Question

Quizplus · Accepted Answer

Quotas limit the quantity of goods that can be imported, which typically reduces supply in the domestic market. This scarcity can lead to higher prices for imported goods, similar to the effect of tariffs. Unlike tariffs, which generate revenue for the government through taxes on imported goods, quotas do not directly generate government revenue and can lead to a decrease in consumer surplus because consumers have to pay higher prices. Quotas also do not necessarily lead to more imports; by definition, they restrict the quantity that can be imported.

Like Tariffs, Quotas Result In