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Question:

Under which of the following types of trade restrictions is the welfare loss to the importing company most likely to be the lowest?

A Tariffs
Explaination

• In a tariff, the welfare loss is reduced by tariff revenue earned by the government.
• In a quota, the quota rents may be captured by the importing country or the exporting country.
• In a VER, the quota rents are captured by the exporting country.