What term refers to a limit on the amount of a good that can be imported?

What term refers to a limit on the amount of a good that can be imported?

• A. Tariffs
• B. Quota
• C. Subsidy
• D. Trade Wars

Answer: (B)

The concept being tested is a quota. A quota is a hard cap on the quantity of a good that can be imported during a set period, meaning imports cannot exceed that limit regardless of price. This directly reduces foreign supply and tends to raise domestic prices to protect local producers. Licenses to import under a quota are often allocated or traded, creating potential rents for license holders. By contrast, tariffs raise the price of imports through a tax (without a fixed quantity limit), subsidies involve payments to domestic or foreign producers, and trade wars refer to a broad strategy of escalating barriers rather than a single limit on quantity.

The concept being tested is a quota. A quota is a hard cap on the quantity of a good that can be imported during a set period, meaning imports cannot exceed that limit regardless of price. This directly reduces foreign supply and tends to raise domestic prices to protect local producers. Licenses to import under a quota are often allocated or traded, creating potential rents for license holders. By contrast, tariffs raise the price of imports through a tax (without a fixed quantity limit), subsidies involve payments to domestic or foreign producers, and trade wars refer to a broad strategy of escalating barriers rather than a single limit on quantity.