-Refer to Exhibit 34-12.P_W is the price that exists in a free world market.If the U.S.imposes a quota to reduce imports to Q₄ - Q₃,price will rise to A) P₁. B) P₂. C) P₃. D) P₄. E) There is not enough information to answer the question.

Question

Quizplus · Accepted Answer

When a quota is imposed that reduces imports, it restricts the supply of the good in the domestic market, leading to an increase in price. The price will rise to the level where the quantity supplied domestically plus the quota amount equals the quantity demanded, which is indicated by P₁ in this context.