Are domestic consumers better or worse off after a large exporting country imposes an export quota?
A) Domestic consumers are better off, since there is a gain in consumer surplus.
B) Domestic consumers are worse off, since there is a loss of consumer surplus.
C) Domestic consumers are neither better nor worse off, since gains in consumer surplus are offset by losses of producer surplus.
D) Domestic consumers may be better or worse off, depending on the magnitude of terms of trade gains.

Question

Quizplus · Accepted Answer

When a large exporting country imposes an export quota, the domestic supply of the good increases, leading to lower prices and an increase in consumer surplus, making domestic consumers better off.

Are Domestic Consumers Better or Worse Off After a Large