Chapter 44, Problem 4MCQ

To determine

The correct option for defining the import quota.

Answer to Problem 4MCQ

Option c is correct.

Explanation of Solution

Explanation for the correct option:

c.

Import quota refers to a type of restriction where countries are defined to import a certain percentage of quantity not beyond that. In other words, it states the maximum level of quantity that can be imported. Therefore, option c is correct.

Explanation for incorrect options:

a.

Import quota defines the maximum quantity of goods and services rather than the minimum quantity. Therefore, option a is the incorrect answer.

b.

Minimum quantity that can be produced in one year is not referred to as import quota. Therefore, option b is incorrect.

d.

Import quota does not set the limit for the manufacturer were beyond a certain level quantity of goods and services cannot be produced. Therefore, option d is incorrect.

e.

Quota defines the number of goods and services rather than their price. Therefore, option e is incorrect.

Economics Concept Introduction

International trade: International trade is an exchange of goods and services across nations. This is due to globalization and comparative advantage. It means goods are produced in one country and are sold in some other country.