In the domestic market following the imposition of an import quota,imports ________,domestic production ________,and prices ________.

Question

Quizplus · Accepted Answer

When an import quota is imposed, it limits the amount of imports that can come into the domestic market. This results in a decrease in imports. In response to a decrease in imports, domestic production increases since domestic producers have less competition in the market. This leads to an increase in domestic production. Lastly, since there is less competition from imports, domestic producers can charge higher prices which result in an increase in prices. Therefore, the correct option is C.

In the Domestic Market Following the Imposition of an Import