What is the major difference between a tariff and a quota that has equivalent effects upon domestic production?
A) A quota does not lead to an increase in domestic prices, while a tariff does.
B) The government collects tariff revenue with a tariff; other domestic groups (e.g., domestic producers, importers) may collect the equivalent of this tariff revenue with a quota.
C) The government collects area c with a tariff; exporters collect area c with a quota, thus leading to further deadweight losses for the quota-imposing country.
D) The government collects area c with a tariff; importers collect area c with a quota, offsetting consumption deadweight losses and leading to lower deadweight losses for the quota-imposing country.

Question

Quizplus · Accepted Answer

The major difference between a tariff and a quota with equivalent effects on domestic production is that the government collects the revenue generated by a tariff, while with a quota, other domestic groups such as domestic producers or importers may collect the revenue equivalent to the tariff.

What Is the Major Difference Between a Tariff and a Quota