Tariffs create deadweight losses and destroy wealth, whereas quotas increase cooperative surplus and create wealth.

Name: Tariffs create deadweight losses and destroy wealth, whereas quotas increase cooperative surplus and create wealth.
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Question

Quizplus · Accepted Answer

Both tariffs and quotas can create deadweight losses by distorting market prices and quantities, reducing the overall efficiency of the market, and thus can destroy wealth rather than create it.

Tariffs Create Deadweight Losses and Destroy Wealth, Whereas Quotas Increase