An import quota places a limit on the amount of a good that can be imported, creating an artificial shortage and driving up the price due to increased demand. This is a common trade policy used by governments to protect domestic industries and decrease reliance on foreign imports.

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An Import Quota

Question 136

Multiple Choice

An import quota

A) limits the amount of a good that can be imported,thus increasing prices.
B) is the same as a ban on imports.
C) increases the amount of a good imported,thus increasing prices.
D) increases the amount of a good imported,thus decreasing prices.
E) limits the amount of a good that can be imported,thus decreasing prices.

Correct Answer: