Quotas benefit and protect producers of goods in the domestic economy but consumers end up paying more when domestically produced goods cost more than imported goods.
Countries sometimes impose quotas on certain products in order to reduce imports and increase domestic production. In theory, quotas increase domestic production by limiting competition with foreign countries. Government programs that enforce quotas are often referred to as protectionist policies.
Import quotas restrict market access for imported products. The result is usually higher domestic prices paid by consumers. This leads to lower consumer surplus and lower real incomes. It may also reduce the choice consumers have in the market. A policy of reducing quantities is called a quota which is a government-imposed limit on the number of goods that can be bought or sold.
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