A quota is a limit on the amount of goods that can be imported
Putting a quota on a good creates a shortage, which causes the price of the good to
rise and makes the imported goods less attractive for buyers. This encourages people
to buy domestic products, rather than foreign good.
Example: Brazil could put a quota on foreign made shoes to 10,000,000 pairs a year.
If Brazilians buyu 200,000,000 pairs of shoes each year, this would leave most of the
market to Brazilian producers.
Germany has imported 2 million tons of steel from France every year for the past decade. Germany then started an import quota on steel. Germany now only imports around 1 million
tons of a.
b. c. ● +
steel from France, but the country of Germany still uses around 3 tons of steel a year. How will this impact German steel companies?
How will this impact Frech steel companies?
Why would a country do this?
Tariffs
A tariff is a tax put on goods imported from abroad
The effect of a tariff is to raise he price of the imported product
It makes imported products more expensive, so that people are more likely to purchase domestic products