Question

Both tariffs and quotas tend to – social welfare. That is, they increase – for domestic consumers and decrease – of the restricted good. In some cases, such as the U.S. shoe market, tariffs on cheap goods hurt – consumers the most, making the tariff an example of a regressive tax.

Answer 1

Answer:

The correct answer is: reduce; price; supply; poor.

Explanation:

A tariff is a tax imposed on the import of goods and services from another country. A quota is a quantitative restriction on the imports.

Both tariff and quotas decreases the supply of imported products. This causes their price to increase. This increase in price reduces the consumer surplus for the domestic consumers.

In some cases where tariff is imposed on cheap goods that are consumed mostly by the poor consumers hurt them the most. Tariff in such situations become an example of regressive tax.