Question

A major difference between tariffs and import quotas is that a. tariffs create deadweight losses, but import quotas do not. b. tariffs help domestic consumers, and import quotas help domestic producers. c. tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import.

Answer 1

Tariffs create deadweight losses while import quotas do not. Tariffs raise revenue for the government while import quotas create surplus for those who hold the licenses to import.

Step-by-step explanation:

The major difference between tariffs and import quotas is that tariffs create deadweight losses, but import quotas do not. Tariffs are taxes imposed on imported goods, which increase the price of the imported goods. This higher price reduces the quantity demanded by domestic consumers, leading to deadweight losses. On the other hand, import quotas restrict the quantity of imported goods, but they do not directly create deadweight losses.

Import quotas limit the quantity of goods that can be imported into a country. They are typically enforced through government-mandated licenses, which are granted to a limited number of domestic producers or importers. These licenses can be sold or rented, creating a surplus for those who hold the licenses. Therefore, tariffs raise revenue for the government, but import quotas create a surplus for those who get the licenses to import.

Answer 2

A major difference is that tariffs raise revenue for the government, but import quotas create a surplus for import license holders