Will a home monopolist prefer a quota or a tariff to protect its output?
a. The home monopolist will prefer a tariff, because a tariff allows it to earn higher profits than a quota.
b. The home monopolist will prefer a quota, because a quota may allow it to earn higher profits than a tariff.
c. It is immaterial to the home monopolist because it will earn the same higher profits with each form of protection.
d. The home monopolist will prefer neither, because it earns higher profits in a free-trade situation.
Ans: b. The home monopolist will prefer a quota, because a quota may allow it to earn higher profits than a tariff.
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