Question

A trade quota on imports ____.

(A) benefits domestic producers and hurts domestic consumers.
(B) benefits domestic consumers and hurts domestic producers.
(C) benefits both domestic producers and domestic consumers.
(D) hurts both domestic producers and domestic consumers.

Answer 1

(A) benefits domestic producers and hurts domestic consumers.

The reason for this is that when a quota is placed on imports the domestic producers face less competition, by putting a quota the supply of the product is artificially decreased, and because of this the producers can sell their goods for higher prices, as the supply curve is shifting to the left. This hurts the domestic consumers because now they have to pay higher prices.

Step-by-step explanation: