A binding quota is a restriction on trade that limits the quantity of goods that can be imported into a country to a level below what would be imported in the absence of the quota. This effectively restricts the supply of the imported goods, potentially raising prices and reducing the quantity available to consumers in the importing country.

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A Binding Quota Is

Question 17

Multiple Choice

A binding quota is:

A) a quota set at zero.
B) a quota set at a level that is below the quantity that would be imported under free trade.
C) a quota set at a level that is above the quantity that would be imported under free trade.
D) a quota set equal to the quantity that would be imported under free trade.

Correct Answer: