Suppose that the country of Pacifica imposes a quota on bananas. The reason that the government imposed this trade restriction could be

Question

Quizplus · Accepted Answer

The imposition of a quota on bananas suggests that the government responded to lobbying efforts of domestic banana farmers who wanted to limit foreign competition. This protectionist measure limits the supply of imported bananas in the domestic market, giving local banana farmers a competitive advantage. Options A and B are not applicable to this scenario since the imposition of a trade restriction through a quota does not reflect the idea of comparative advantage nor aims to increase revenue for the government.

Suppose That the Country of Pacifica Imposes a Quota on Bananas