The welfare effects of a quota depend,to considerable extent,upon
A)who has the quota license.
B)the size of the quota.
C)elasticities of domestic demand and supply.
D)all of the above.

Question

Quizplus · Accepted Answer

All of the above factors - who has the quota license, the size of the quota, and elasticities of domestic demand and supply - have an impact on the welfare effects of a quota. The entity that holds the quota license determines which domestic producers benefit from the quota, and this can impact consumer surplus. The size of the quota affects how much of the imported good is allowed in and how much domestic producers can produce, which can impact both consumer and producer surplus. Elasticities of demand and supply determine how responsive consumers and producers are to price changes, and this can impact the overall welfare effects of the quota.

The Welfare Effects of a Quota Depend,to Considerable Extent,upon