If a country is small in world markets and imports some product at the world price, the country effectively faces a horizontal foreign supply curve for that product. If the country then restricts the volume of imports by imposing an import quota, the effect on the domestic market for that product is to
A) make the domestic demand curve a vertical line at the permitted quantity of imports.
B) make the domestic demand curve a horizontal line at the permitted quantity of imports.
C) shift the entire supply curve to the left.
D) make the foreign supply curve a horizontal line at the current price.
E) make the foreign supply curve a vertical line at the permitted quantity of imports.
Correct Answer:
Verified
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