The welfare loss of a tariff equals that of an import quota that leads to the same level of imports
Indicate whether the statement is true or false
False. In the case of a tariff the government receives revenue which does not reduce welfare. With a quota this amount is often lost to foreign importers.
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If a French company sells 1000 gallons of Perrier to a U.S. company at 5 euros per gallon, and uses the money to buy stock in a Spanish cork company, how does this affect the French balance of payments accounts?
A) Decrease in financial account; increase in merchandise trade B) Decrease in merchandise trade; increase in financial account C) Decrease in net investment income from abroad; increase in financial account D) Decrease in merchandise trade; increase in net income from abroad
Give an example of a firm that is experiencing negative marginal product and explain how the firm could change this situation.
What will be an ideal response?