An import quota restricts the amount of a good that can be imported, thereby reducing the supply of the good in the domestic market. This decrease in supply leads to an increase in prices due to consumers competing to buy the limited amount of goods available. Therefore, limiting the quantity of imports increases prices, making D the best choice.

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An Import Quota

Question 47

Multiple Choice

An import quota:

A) increases the amount of a good imported, thus increasing prices.
B) increases the amount of a good imported, thus decreasing prices.
C) limits the amount of a good that can be imported, thus decreasing prices.
D) limits the amount of a good that can be imported, thus increasing prices.

Correct Answer: