ACCA Applied Knowledge · Business and Technology · Macroeconomic factors
A government wants to protect a domestic steel industry from cheaper foreign competition. It imposes a limit on the physical quantity of steel that may be imported each year. Which trade barrier is this?
This is a quota. A quota places a physical limit on the quantity of a good that may be imported in a period. A tariff instead taxes imports to raise their price, and an export subsidy helps domestic exporters rather than restricting imports.
- AA tariff
- BA quotaCorrect
- CA subsidy to exporters
Explanation
A quota restricts the quantity of a good that can be imported over a period. A tariff is a tax on imports, which raises their price rather than limiting the quantity directly. An export subsidy supports domestic exporters and is not an import restriction.
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