How will an export quota imposed by a large exporting
Country affect the world price?
A)It will cause an increase in the world price.
B)It will cause a decrease in the world price.
C)It will have no effect upon the world price.
D)It will first cause an increase, then a decrease the world price.

Question

Quizplus · Accepted Answer

When an exporting country imposes an export quota, it limits the amount of goods that can be sold to other countries. As a result, there is a decrease in supply which leads to an increase in price. This increase in price affects the world price, causing it to increase as well. Therefore, the correct answer is A - it will cause an increase in the world price.

How Will an Export Quota Imposed by a Large Exporting