-When compared with the case of free trade,the imposition of a quota of wy will:
A)lower domestic price and increase domestic consumption
B)increase the revenues of domestic producers by areas E + F + K
C)increase the revenues of domestic producers by areas G + H
D)increase the revenues of domestic producers by areas E + F + G + H + J
E)lower the revenues of domestic producers by areas E + F + G + H + J

Question

-When compared with the case of free trade,the imposition of a quota of wy will:
A)lower domestic price and increase domestic consumption 
B)increase the revenues of domestic producers by areas E + F + K 
C)increase the revenues of domestic producers by areas G + H 
D)increase the revenues of domestic producers by areas E + F + G + H + J 
E)lower the revenues of domestic producers by areas E + F + G + H + J

Quizplus · Accepted Answer

CThe imposition of a quota restricts the quantity of goods that can be imported, which typically leads to an increase in the domestic price of the good. This higher price benefits domestic producers by allowing them to sell their goods at a higher price, thus increasing their revenues. The specific areas (E + F + K and G + H) represent the additional revenue gained by domestic producers due to the higher prices and reduced competition from imports. The exact areas depend on the structure of the market and the size of the quota, but both choices B and C correctly indicate an increase in domestic producers' revenues, albeit through different components of the economic model.

-When Compared with the Case of Free Trade,the Imposition of a Quota