The effect of an import quota is
A) to shift the supply curve up by the amount of the quota.
B) to lead to a decrease in demand.
C) to make the supply curve vertical at the amount of the quota.
D) to make the supply curve horizontal at the amount of the quota.

Question

Quizplus · Accepted Answer

An import quota limits the quantity of a good that can be imported into a country. This limitation effectively makes the supply curve vertical at the quota amount, as no additional units can be supplied beyond the quota regardless of the price.

The Effect of an Import Quota Is