Question

Cambodia is a small importer of copper Wire from Belgium. The graph to the right represents Cambodian ordinary demand and supply curves. The Serbian Market for Copper Wire 10- The free-trade price of copper Wire is $2 per linear foot. 9- Assuming that Belgian residents would earn the quota rent, an import quota of 40 would have the same effect on net Cambodian welfare as a $3 per linear foot tariff. OA. False O B. True Note: You will be better able to see the values of prices and quantities by maximizing the graph. To do so, click on the magnifying glass () that is in the top right-hand corner of the graph. 0 50 20 70 30 40 90 100 10 linear feet Demand Supply og Jeaui Jad suejo

Answer 1

True

Import quota results in higher deadweight loss as it does not generate revenue for the government like tariff. But when residents earn quota rent, tarif revenue is equal to quota rent and thus both result in same welfare loss.