A quota restricts the quantity of imports, which reduces competition in the domestic market. This results in higher prices for consumers and a decreased variety of goods to choose from, making them worse off. However, domestic producers may benefit since they face less competition and can sell their goods at higher prices.

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A Quota

Question 127

Multiple Choice

A quota

A) makes domestic consumers worse off.
B) makes both domestic producers and consumers better off.
C) makes everyone worse off.
D) makes domestic producers worse off.

Correct Answer: