What happens to profits and domestic prices when a quota is used to protect a domestic monopolist from international competition is C. Profits will fall and domestic prices will fall.
An import quota is a trade restriction, limiting the quantity of a good that can be imported into a country in a period.
It creates undue advantages for domestic producers and discourages international competitiveness.
a. Prices will rise and outputs will fall.
b. Prices will rise and outputs will rise.
c. Profits will fall and domestic prices will fall.
d. Prices will fall and outputs will fall
Thus, a quota is used to protect a domestic monopolist from international competition is C. Profits will fall and domestic prices will fall.
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