Import quotas

Question

Import quotas

Quizplus · Accepted Answer

Import quotas limit the supply of foreign wine, causing an increase in the price of wine for the domestic consumer. This is due to the decreased availability of foreign wine, which allows domestic producers to charge higher prices without fear of competition. Import quotas can have a protective effect by protecting domestic producers from foreign competition, but they do not necessarily have a consumption effect. There is also a deadweight welfare loss associated with import quotas, as they prevent the market from reaching its efficient equilibrium.

Import Quotas