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Import Quota

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Assuming a products is produced both in the US and abroad what would be the effects of a US import quota on the good? Describe some of the attributes of the new economy.

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Solution Summary

The the "ceteris paribus" (all else held equal) impact of the quota is articulated.

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I will tell you about the "ceteris paribus" (all else held equal) impact of the quota, but keep in mind that to predict the specific, real world, effect we would need more information - like possible differences in the cost of production, etc.

OK so we are assuming that a product, let's say wine, is produced both at home and abroad. Now, the US decides to put on a quota - meaning that the US government forces an inefficiently low quantity ...

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