Given that quotas benefit producers,who are few in number,at a greater expense to consumers,who are more in number,which of the following correctly explains why quotas are still in effect?
A)Domestic consumers are better organized than domestic producers.
B)Quotas reduce prices in domestic markets.
C)The benefits of quotas are concentrated and visible while the costs are dispersed.
D)When a quota is imposed by the importing country,it lowers prices in the global market.

Question

Quizplus · Accepted Answer

The benefits of quotas are concentrated and visible to the few producers who benefit from them, while the costs are dispersed among the many consumers affected by higher prices. This creates a situation where the producers who benefit have a strong incentive to lobby for the continuance of the quotas, while individual consumers have little incentive to organize and oppose them. Therefore, quotas tend to persist even though they may not be in the best interest of the broader public. Choices A and D are incorrect because they do not address the specific incentives producers and consumers face with respect to quotas. Choice B is incorrect because quotas generally raise prices in domestic markets rather than reducing them.

Given That Quotas Benefit Producers,who Are Few in Number,at a Greater