Which of the following is false?

Question

a. Welfare effects of quotas depend, in part, on who gets the quota rents.

b. Quotas tend to breed graft.

c. Tariffs and quotas are identical in their effects, if the protected industry is a monopoly.

d. Quotas tend to be administrated in an arbitrary fashion.

Answer 1

d. Quotas tend to be administrated in an arbitrary fashion.

Answer 2

D is true - consider the widespread practice of quota evasion:

http://info.hktdc.com/alert/us0618.htm

A is true as stated, thought it is really false - there is not much doubt who gets the quota rents.

B is clearly true

That leaves C. It is clearly false. If the protected industry is a monopoly, then quotas introduce lower-priced competition for at least part of the market, making the market oligopolistic rather than a monopoly. While a tariff limits the prices a monopoly can charge, it does leave it as the only supplier in the local market up to that point.