An effective import quota

Question

Quizplus · Accepted Answer

An effective import quota will lower the quantity demanded of the imported good by placing a limit on the amount of the good that can be imported. This is intended to protect domestic producers by reducing competition from foreign imports. However, it does not necessarily lower the price of imports or increase the variety of goods available to consumers, and it does not generate tax revenues. It may indirectly lower the price of domestic goods competing with imports if there is less competition, but this is not the primary objective of an import quota.

An Effective Import Quota