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Published
30 May 2019
Last updated
28 May 2026

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When a tariff and an import quota cause the same increase in the domestic steel price, what differs between the two policies?

Multiple choice question for Non-Tariff Trade Barriers. Select an option, then review the explanation below.

Choose the correct answer

Explanation

Although both a tariff and an import quota can raise domestic prices by the same amount, their effects on income distribution differ. The quota often creates quota rents that benefit import license holders, whereas the tariff generates government revenue. However, both policies similarly reduce efficiency and have comparable impacts on production and consumption quantities.

Practice related questions from the same subject.

  1. 1.Which U.S. company would be most affected by Brazil selling steel at below-market prices in the American market?
  2. 2.Which type of quota limits the quantity of goods that can be imported annually without restricting the source country or the authorized importers?
  3. 3.Based on the cost-based definition, dumping happens when a company exports a product at a price lower than which of the following?
  4. 4.Which type of dumping is associated with the highest possible net welfare loss for the importing country?
  5. 5.Which policy restricts outsourcing by mandating that a certain portion of a product's value be manufactured within the country to qualify for sale in the domestic market?

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