Suppose a government is considering imposing either a tariff or a quota on imported grain, and either policy will result in exactly 750 tons of grain being imported. How do these policies differ?

A. The price of grain under the quota will be higher than the price under the tariff.
B. The price of grain under the tariff will be higher than the price under the quota.
C. Domestic production will be higher with the quota than with the tariff.
D. The quota will generate revenue for the firms that hold import licenses, while the tariff will generate revenue for the government.


Answer: D

Economics

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