Author Question: A government can impose an import quota or an equivalent tariff that achieves the same impact on ... (Read 111 times)

Sufayan.ah · **on:** Jul 1, 2018

A government can impose an import quota or an equivalent tariff that achieves the same impact on trade. What is the key difference in the welfare outcomes of these two policy options?

A) The domestic quantity supplied is larger under the tariff policy.
B) The domestic price is higher under the tariff policy.
C) The domestic price is lower under the tariff policy.
D) The government captures some of the profits from foreign suppliers through the tariff revenue.

Question 2

The authors note that the goal of maximizing the market value of the firm may be more appropriate than maximizing short-run profits because:

A) the market value of the firm is based on long-run profits.
B) managers will not focus on increasing short-run profits at the expense of long-run profits.
C) this would more closely align the interests of owners and managers.
D) all of the above