How will an export quota imposed by a large exporting country affect the total quantity sold by the country's firms?
A) It will cause an increase in the total quantity sold by the country's firms.
B) It will cause a decrease in the total quantity sold by the country's firms.
C) It will have no effect upon the total quantity sold by the country's firms.
D) It will have an indeterminate effect on the total quantity sold by the country's firms.

Question

Quizplus · Accepted Answer

Imposing an export quota will limit the quantity of goods that can be exported, and as a result, it will decrease the total quantity sold by the country's firms. When there is a limited supply of goods to export, firms will only be able to sell a smaller quantity of goods, which will lead to a decrease in the total quantity sold.

How Will an Export Quota Imposed by a Large Exporting