Assume that the United States imposes an import quota on Columbian coffee.Relative to the equilibrium world price that would prevail in the absence of import quotas,it is likely that the equilibrium price of coffee in the United States will _____ and the equilibrium price of coffee in Columbia will _____.

Question

Quizplus · Accepted Answer

When the U.S. imposes an import quota on Columbian coffee, the supply of coffee in the U.S. decreases and the demand for Columbian coffee in the U.S. increases. This leads to an increase in the equilibrium price of coffee in the U.S. On the other hand, the decrease in the quantity of coffee demanded by the U.S. also leads to a decrease in the equilibrium price of coffee in Columbia, as there is now a surplus of coffee in the Columbian market. Therefore, the equilibrium price of coffee in the U.S. will increase and the equilibrium price of coffee in Columbia will decrease.

Assume That the United States Imposes an Import Quota on Columbian