Question

An import​ quota: A. Is always more costly to a country than an import tariff. B. Has the same effects on welfare as an import tariff. C. Is always less costly to a country than an import tariff. D. Generates rents that might go to foreigners.

Answer 1

D. Generates rents that might go to foreigners.

Step-by-step explanation:

An import quota is the trade restriction imposed by the government on the quantity of the particular commodity to be imported from another country. It protects domestic producers from foreign competition. Overseas goods are generally very cheap compared to locally produced goods, which can destroy a business from the market and can make foreign companies be the leader of the market, who can control the price and quality of the product. Therefore, it very helpful to the local producer in sustaining and generating profit in the market.