The effects of a quota are similar to those of a tariff in that consumers pay _____ prices and imports _____ as a result of the quota.

Question

Quizplus · Accepted Answer

A quota restricts the quantity of imported goods, leading to a decrease in supply and thus an increase in prices for consumers. With a restricted supply, imports will fall as well, leading to a decrease in competition for domestically produced goods. Therefore, the effects of a quota are similar to those of a tariff in that they both result in higher prices and lower imports.

The Effects of a Quota Are Similar to Those of a Tariff