Import Quota

How quotas limit imports and improve domestic producers' welfare at the expense of consumers and society.

Import Quota

International Trade

Government limits quantity of imports

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1

Free Trade Equilibrium

A market imports goods under free trade when Pw < P* (i.e. the international market is more competitive than the domestic market). Consumers consume at Qd, importing quantities Qd - Qs, with domestic producers only supplying up to Qs.

Step 1 of 10Free Trade Equilibrium