Assume that the United States imposes a quota on Italian shoes.Relative to the equilibrium world price that would exist in the absence of quotas, the equilibrium price of shoes in the United States will most likely _______ , and the equilibrium price of shoes in Italy will most likely _______ .

Question

Quizplus · Accepted Answer

When the United States imposes a quota on Italian shoes, it reduces the supply of Italian shoes in the US market, leading to an increase in the price of shoes in the United States. At the same time, there will be an excess supply of shoes in the Italian market, leading to a decrease in the price of shoes in Italy. Hence, the equilibrium price of shoes in the United States will most likely increase, while the equilibrium price of shoes in Italy will most likely decrease.

Assume That the United States Imposes a Quota on Italian