The welfare loss from an import quota is greater than that of an equivalent tariff because
A) tariff revenues can be used to society's benefit.
B) the loss in consumer surplus is not as large.
C) domestic producers gain more from a quota than from a tariff.
D) tariff revenues represent an additional deadweight loss.

Question

Quizplus · Accepted Answer

Tariff revenues generated by the government can be redistributed or spent in ways that benefit society, mitigating some of the welfare loss associated with tariffs. In contrast, the welfare loss from an import quota does not generate revenue for the government, making its overall cost to society potentially greater.

The Welfare Loss from an Import Quota Is Greater Than