Question

Suppose the U.S. decided to use a quota to limit cell phone imports. Assume the U.S. is a small country. If the U.S. used an auction to allocate quota rights A. the U.S. welfare would be lower than it would be if the exporting countries used voluntary export restraints instead. B. the auction could generate revenue that was roughly equal to the revenue generated by a tariff which limited imports to the level allowed under the quota. C. the U.S. welfare would be higher than it would be if U.S. continued to have a free trade policy. D. the auction would generate much more revenue than would be generated by a tariff which limited imports to the level allowed under the quota.

Answer 1

C

Explanation:

the auction could generate revenue that was roughly equal to the revenue generated by a tariff which limited imports to the level allowed under the quota.