Which statement best describes the result of a small country imposing a quota on imported sugar?
A) The domestic price of sugar will fall.
B) Domestic sugar consumption will fall.
C) Domestic sugar production will fall.
D) Domestic sugar consumption will rise.

Question

Quizplus · Accepted Answer

When a small country imposes a quota on imported sugar, it limits the amount of foreign sugar that can come in. This creates a shortage of sugar, which drives up the price of sugar in the domestic market. As a result, domestic sugar consumption will fall, as consumers switch to cheaper alternatives or reduce their sugar consumption altogether. However, domestic sugar production may not necessarily fall, as domestic producers may ramp up their production in response to the higher prices.

Which Statement Best Describes the Result of a Small Country