What is the difference between a tariff and a trade quota?
A) A tariff is a tax on imported goods, and a trade quota is a quantity restriction on imported goods.
B) A tariff is a cash payment to domestic exporters, and a trade quota restricts the quantity of domestically produced goods foreigners can buy.
C) A tariff is a lump-sum tax on imported goods, and a trade quota is a sales tax on imported goods.
D) A tariff is a quantity trade restriction on imported goods, and a trade quota is a quantity tax on imported goods.

Question

Quizplus · Accepted Answer

A tariff is a tax on imported goods, whereas a trade quota is a quantitative restriction on the amount of imports allowed. Therefore, A is the correct answer as it correctly identifies the difference between a tariff and a trade quota. Choices B, C, and D are incorrect because they either misidentify the purpose of the policies or provide inaccurate definitions of the terms.

What Is the Difference Between a Tariff and a Trade