When a country that imports a particular good imposes an import quota on that good,
A)producer surplus increases and total surplus increases in the market for that good.
B)producer surplus increases and total surplus decreases in the market for that good.
C)producer surplus decreases and total surplus increases in the market for that good.
D)producer surplus decreases and total surplus decreases in the market for that good.

Question

Quizplus · Accepted Answer

An import quota restricts the quantity of a good that can be imported, which typically raises the domestic price of the good. This benefits domestic producers, increasing producer surplus, but harms consumers and reduces total surplus due to the loss of efficiency and consumer surplus.

When a Country That Imports a Particular Good Imposes an Import