Which of the following statements is TRUE? A quota is beneficial to domestic pro

Question

Which of the following statements is TRUE? A quota is beneficial to domestic producers because it restricts imports, increases production by domestic producers, and raises their price. A quota is beneficial to foreign producers because it does not restrict the number of cars they can sell. E. A tariff is beneficial to both domestic and foreign producers because it raises the price of cars. O A tariff is beneficial to both domestic and foreign producers because it raises the price of cars. A rise in tariff barriers is beneficial to domestic consumers because it allows them to buy cheaper domestic goods. A fall in tariff barriers is harmful to foreign producers because it lowers the price in the market.

Explanation / Answer

Solution-

The correct option is A. A quota is beneficial to domestic producers because it restricts imports, increases production by domestic producers, and raises their price.

Reason-

There are direct restrictions on some good things that can be imported into the country. The restriction is usually made by issuing import permits to a person or company group. Local producers benefit from limiting the import quota of import competition.An import quota always increases the local price of imported good value. If the domestic industry does not have the ability to fulfill the demand, then the import quotas can increase prices for both domestic produced and imported prices.

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