Answer the next six questions using the following diagram:

-If the government resorts to a quota of Q_TQ_J:

Question

Answer the next six questions using the following diagram: -If the government resorts to a quota of Q_TQ_J:

Quizplus · Accepted Answer

The correct answer is D because when a government imposes a quota, it limits the quantity of a good that can be imported, rather than imposing a tariff (a tax on imports). This means the government does not collect revenue from the quota as it would from a tariff. Instead, the limited supply often allows foreign sellers to increase their prices up to the point where the domestic price equals the world price plus the tariff equivalent, effectively transferring what would have been tariff revenue to the foreign sellers as extra profit.

Answer the Next Six Questions Using the Following Diagram