Related to the Economics in Practice on p. 664: When a country imposes a quota, imports to that country generally ________ and the price of the affected product in that country generally ________.
A) increase; rises
B) increase; falls
C) decrease; rises
D) decrease; falls

Question

Quizplus · Accepted Answer

When a country imposes a quota, imports to that country generally decrease as the limited supply of imports induces domestic consumers to switch to domestically produced goods. The price of the affected product in that country generally rises because the quantity demanded of the product exceeds the quantity supplied at the lower price level. This leads to upward pressure on the price to a level where the quantity demanded equals the quantity supplied.

Related to the Economics in Practice on P