Question

Import quotas and tariffs produce similar results. Which of the following is not one of those results? a. The domestic price of the good increases. b. Consumer surplus of domestic consumers increases. c. Producer surplus of domestic producers increases. d. A deadweight loss is experienced by the domestic country.

Answer 1

Consumer surplus of domestic consumers increased.
The imposition of tariff and quotas made the consumer to purchase high priced imported goods. There is a reduction in choice of goods in consumption bundle. Consumer only has less amount of money to purchase the imported goods and other goods also. The will leads to the reduction of consumer to purchase low amount of imported goods. This affects the purchasing power of consumer negatively. Consumer pay higher prices because tariff limited the options of consumer. This made benefit for producers only. It protects the domestic firms to increase their sales and raising of price level.