Are domestic firms better or worse off after a large exporting country imposes an export quota?
A) Domestic firms are worse off, since there is a loss of producer surplus.
B) Domestic firms are better off, since producer surplus rises.
C) Domestic firms are better off, since there is an increase in the rents they earn.
D) Domestic firms are neither better nor worse off, since their higher export price is offset by a lower price in the domestic market.
Correct Answer:
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