Question

What is the effect of import restrictions on prices?

a. they cause prices to drop.


b. they cause prices to rise.


c. they often cause prices to rise steeply and then drop.


d. they usually do not have any lasting effect on price?

Answer 1

The correct answer to this question is choice b - they cause prices to rise.

When there are restrictions on items that are being imported it will decrease the supply of these items because of the restrictions. Because of the lower supply, the price is going to be higher for these items.