Suppose an import quota of 13,000 is imposed in the domestic market.What will be the new market price of sugar?

Question

Quizplus · Accepted Answer

When an import quota is imposed, the domestic supply of the good decreases as only a limited amount of imports is allowed to enter the market. This decreased supply leads to an increase in the market price of sugar. Without any other information, it is impossible to determine the exact magnitude of the price increase. Therefore, options A, B, and D are all unlikely to be correct choices. However, option C provides a reasonable estimate of the price increase that could occur as a result of the import quota.

Suppose an Import Quota of 13,000 Is Imposed in the Domestic