Question

How do quotas help domestic producers?

Quotas facilitate increased exports of domestic goods.
Quotas lower the cost of domestic goods.
Quotas limit the number of producers that compete in a sector.
Quotas facilitate the sale of more domestic goods.

Answer 1

Correct answers: 3 and 4.

Explanation: Import quotas restrict the quantity (and thus the number) of foreign producers supplying the domestic market, reducing competition. That allows domestic firms to sell more of their goods in the home market (and often at higher prices). Quotas do not lower domestic production costs, nor do they directly increase exports.