Concerning the restrictive impact of an import quota, assume there occurs an increase in the domestic demand for the import product.As long as the quota falls short of what would be imported under free market conditions, the economy's adjustment to the increase in demand would take the form of

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An import quota limits the quantity of goods that can be imported. If domestic demand increases but the quota remains unchanged and is less than the free market import level, domestic prices would increase due to the higher demand and limited supply.

Concerning the Restrictive Impact of an Import Quota, Assume There