Assume that Canada imposes an import quota on Scottish wool suits.Relative to the equilibrium price that would prevail in the absence of quotas,the equilibrium price of suits in Canada will most likely _____ and the equilibrium price of suits in Scotland will most likely _____.

Question

Quizplus · Accepted Answer

When Canada imposes an import quota on Scottish wool suits, the supply of Scottish wool suits will decrease in Canada, causing the price to increase. At the same time, the supply of Scottish wool suits will increase in Scotland, causing the price to decrease. Therefore, the equilibrium price in Canada will increase and the equilibrium price in Scotland will decrease.

Assume That Canada Imposes an Import Quota on Scottish Wool