CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Which trade policy will decrease consumer surplus?

I. Tariff
II. Import quota
III. Export subsidy
Correct Answer: I, II, III and IV

User Contributed Comments 3

User Comment
something Can someone explain III and IV.
uvp5003 Makes it a little easier if you think of this graphically for an export subsidy - it causes a shift to the left of the supply curve, effectively reducing the area above the supply curve aka reducing the consumer surplus.

A VER has effectively the same impact as a quota, but instead of being imposed by the importer, it's imposed by the exporter. So the logic you used to justify a quota is the same logic you would use to justify a VER for this question.
khalifa92 all decrease consumer surplus but increase producer surplus
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