Which of the following situations will arise in the domestic market following the imposition of an import quota?

Question

Quizplus · Accepted Answer

An import quota limits the quantity of goods that can be imported into a country. This reduction in imported goods leads to a decrease in the overall supply of the good in the domestic market. As a result, domestic producers face less competition from foreign goods, which encourages an increase in domestic production to fill the gap left by the reduced imports. With the supply of the good becoming more limited due to the quota, the price of the good in the domestic market typically increases.

Which of the Following Situations Will Arise in the Domestic