Multiple Choice
What is the typical effect of import quotas and voluntary export restraints (VERs) on the domestic price of the restricted good?
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9. International Trade
Import Quotas and VERs
Multiple Choice
Which of the following is an example of an import quota?
A
A government sets a maximum limit of 10,000 cars that can be imported each year.
B
A government provides subsidies to domestic wheat producers.
C
A government imposes a 20% tariff on all imported electronics.
D
A government requires all imported goods to meet specific safety standards.
Verified step by step guidance1
Understand the concept of an import quota: it is a government-imposed limit on the quantity of a specific good that can be imported into a country during a given time period.
Review each option and identify whether it sets a physical limit on the quantity of imports (which would be a quota) or if it involves other trade policies like tariffs, subsidies, or regulations.
Recognize that a subsidy to domestic producers is a financial support, not a limit on imports.
Identify that a tariff is a tax on imports, not a quantity restriction.
Note that safety standards are regulatory requirements, not limits on the number of goods imported.
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