The net loss to a country as a result of a quota is smaller than the net loss of an equivalent tariff.

Question

Quizplus · Accepted Answer

A quota typically results in a larger net loss to a country than an equivalent tariff because quotas do not generate revenue for the government, whereas tariffs do. Additionally, quotas can lead to inefficiencies and distortions in the market that tariffs might not, such as encouraging rent-seeking behavior.

The Net Loss to a Country as a Result of a Quota