When the monopoly firm is able to charge a higher price because of a quota, the amount of ________ also increases, thus magnifying the importing nation's __________.

Question

Quizplus · Accepted Answer

Quota rents refer to the additional profits earned by the domestic producers due to the quota. By being able to charge a higher price, the amount of quota rents also increases. However, this ultimately results in higher costs for consumers, leading to a reduction in their welfare or economic losses. Therefore, the importing nation's losses are magnified.

When the Monopoly Firm Is Able to Charge a Higher