Question

Suppose the United States auctioned off all import quotas, the auctions were perfectly competitive, and the government received the revenues from the auction. In this case, the deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff. equal to less than in the case of demand being elastic, greater than greater than

Answer 1

In this case, the deadweight loss from a quota would be equal to the deadweight loss from an equivalent tariff.

Step-by-step explanation:

Answer 2

In this case, the deadweight loss from a quota would be equal to the deadweight loss from an equivalent tariff.

Step-by-step explanation:

Deadweight is a term used in economics that refers to losses in some market sector resulting from the inefficiency of that sector. Some causes of deadweight are prices imposed by monopolies, presence of externalities, customs tariffs, subsidies, regulations, or factors that lead to inefficient resource allocations. In the case of government intervention using protectionist methods, the deadweight is also called by-product distortion. Suppose the United States reads all import quotas, the auctions are perfectly competitive, and the government receives the proceeds from the auction. In this case, the deadweight loss of a quota would be equal to the deadweight loss of an equivalent tariff.