Assume that Brazil imposes an import quota on Nike running shoes from the United States. Relative to the equilibrium world price that would exist in the absence of import quotas, the equilibrium price of Nike shoes in Brazil will most likely _____, and the equilibrium price of shoes in the United States will most likely _____.

Question

Quizplus · Accepted Answer

Imposing an import quota on Nike running shoes from the United States would limit the supply of these shoes in Brazil, likely increasing their price in Brazil due to scarcity. In the United States, the reduced ability to export to Brazil could lead to an oversupply of these shoes, potentially decreasing their price.

Assume That Brazil Imposes an Import Quota on Nike Running