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Basic Question 10 of 17
Suppose the government is considering imposing either a tariff or a quota on an imported good. If they use a quota, they will distribute the import licenses randomly to importers. With a quota, the ______ will make money; under a tariff, the ______ will make money.
B. importers; government
C. Neither the government nor the importers will make money.
A. government; importers
B. importers; government
C. Neither the government nor the importers will make money.
User Contributed Comments 3
| User | Comment |
|---|---|
| Smiley225 | government charges for import licenses could make A an option. |
| hocj | not really as govt would still make $$ under tariffs, not importers. |
| mikus | can someone explain how importers make money when quota is imposed on a product they are importing? firstly, the product now may be more expensive as exporting counterpart may raise the prices to cover the loss on volume; secondly, imposing quota reduces imports, which leads to increased domestic production; domestically produced products are typically more expensive so I just do not see how importer can make money with quotas. |
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Learning Outcome Statements
compare types of trade restrictions, such as tariffs, quotas, and export subsidies, and their economic implications
CFA® 2024 Level I Curriculum, Volume 1, Module 6.