Use the following to answer questions:
Figure: Market Changes
-The U.S. government limits the importation of Chinese-made bras. What effect does this trade restriction have on the market for bras?
A) The equilibrium price will increase and the equilibrium quantity will decrease.
B) The demand for bras will increase, leading to a lower equilibrium price.
C) The equilibrium price will increase and the equilibrium quantity will increase.
D) The equilibrium price will decrease, leading to a higher equilibrium quantity.

Question

Use the following to answer questions:
Figure: Market Changes 
-The U.S. government limits the importation of Chinese-made bras. What effect does this trade restriction have on the market for bras?
A) The equilibrium price will increase and the equilibrium quantity will decrease. 
B) The demand for bras will increase, leading to a lower equilibrium price. 
C) The equilibrium price will increase and the equilibrium quantity will increase. 
D) The equilibrium price will decrease, leading to a higher equilibrium quantity.

Quizplus · Accepted Answer

By limiting the importation of Chinese-made bras, the supply of bras will decrease, causing the equilibrium price to increase. Additionally, the decrease in supply will cause the equilibrium quantity to decrease as well. Therefore, the correct choice is A.

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