Question

Which of the following can increase social surplus in a country? Circle all that apply.
(a) Tariff
(b) Import Quota
(c) Export Subsidy

Answer 1

Both tarrif and import quota can increase the social surplus of a country. Social surplus of a country means total surplus that is consumer + producer. So if tarrif will be decreased then goods become cheaper and the producer can produce more of a good. Same will be applied in import quota. If the import quota will be reduced then domestic firm will face less competition and they will produce more goods in the domestic country