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The correct option that determines the difference between the effect of tariffs and the effect of quotas in free-trade output.
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Answer to Problem 6MCQ
Option d is correct.
Explanation of Solution
Explanation for the correct option:
d.
Quotas imposed limits on imports where government gains no revenue for such actions. Tariffs refer to the charges levied on imports that increase government revenues. Therefore, option d is correct.
Explanation for incorrect options:
a.
The effect of quotas and the effect of the trade tariff are similar. Therefore, option a is the incorrect answer.
b.
The prices always increase for the goods imported from abroad in either case i.e. tariffs or quotas. Therefore, option b is incorrect.
c.
Revenues do not decrease due to quotas as no charges are levied. Therefore, option c is incorrect.
e.
With both quotas and tariffs imports are restricted. Therefore, option e is incorrect.
International trade: International trade is an exchange of goods and services across nations. This is due to globalization and
Chapter 44 Solutions
Krugman's Economics For The Ap® Course
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