When a large country imposes a tariff on its imports a. the exporting country loses. Answer questions 12-15 based on the following diagram. Tariffs and quotas are identical in their effects, if the protected industry is a monopoly. Quotas replace the market mechanism and contain the seeds of corruption. Welfare effects of quotas depend, in part, on who gets the quota rents.
Quotas tend to be administrated in an arbitrary fashion.
Tariffs can be used to redistribute income from a. abundant factors to scarce factors. A production subsidy combined with free trade a. has the same deadweight costs as a tariff. In developed countries, tariffs on raw materials tend to be a. highest of all. Export subsidies can take the form of a. direct payments from a government to exporting firms.