Question

"American apparel makers complain to Congress about competition from China. Congress decides to impose either a tariff or a quota on apparel imports from China. Which policy would Chinese apparel manufacturers prefer

Answer 1

quota

Explanation:

China would most likely prefer an allocation, rather than a flow, in this case. Especially in comparison with a quota, traffic to local consumers will yield stronger economic performance.

Traffic should better prevent domestic companies and raise government income that can be used to cut taxes or fund government goods and services. A quota boosts rates, and the domestic country does not earn additional revenue. The international producers would benefit from the quota.

Therefore the correct answer is the quota.