If an import quota is imposed on imports of shrimp into the United States,U.S.producer surplus from shrimp will ________ and U.S.total surplus from shrimp will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) increase; not change

Question

Quizplus · Accepted Answer

An import quota on shrimp will benefit U.S. producers by reducing foreign competition, thus increasing producer surplus. However, it will decrease total surplus because it introduces inefficiency by limiting the supply of shrimp, raising prices, and reducing consumer surplus more than it increases producer surplus.

If an Import Quota Is Imposed on Imports of Shrimp