Quotas in International Trade: Costs and Benefits

A nation that produces luxury cars implements a quota on cars imported from its trading partners. The quota will _most likely_ benefit:

Incorrect. To the contrary, foreign producers will generally see the sales of their product curtailed as a result of the quota, serving to make them worse off.

Correct. Quotas are often implemented as a means of protecting domestic producers of goods for which there exists foreign competition, so restricting the amount of imports would typically make domestic producers better off.

Incorrect. A quota will generally restrict the availability of goods in the marketplace, typically making consumers worse off.

foreign producers.

domestic producers.

domestic consumers.