Which of the following is common to both tariffs and quotas?
A)Tariffs and quotas are both used as a means to increase government revenue.
B)Tariffs and quotas both increase economic efficiency.
C)Tariffs and quotas are both designed to reduce foreign competition faced by domestic firms.
D)Tariffs and quotas are both examples of voluntary export restraints.

Question

Quizplus · Accepted Answer

Both tariffs and quotas are protectionist measures used to reduce the amount of foreign competition faced by domestic firms. Tariffs increase the price of imports, while quotas limit the amount of imports that can enter a country. Both measures are designed to protect domestic industries from foreign competition, but can also lead to higher prices for consumers and reduced trade. Option A is incorrect, as only tariffs are used to increase government revenue. Option B is incorrect, as quotas may actually decrease economic efficiency by limiting the availability of goods and services. Option D is incorrect, as voluntary export restraints are a type of quota imposed by the exporting country, rather than the importing country.

Which of the Following Is Common to Both Tariffs and Quotas