Quotas
Types of Trade Protection
AO3·AO4·Diagram required
Syllabus requirement
A limit on the quantity of a good that can be imported, affecting domestic supply and demand outcomes similarly to tariffs.
Assessment objectives
AO3 Synthesis and EvaluationAO4 Use of Appropriate Skills
Required diagram: Quota diagram showing restriction on import quantity, increase in domestic price, consumer/producer surplus effects, and welfare loss.
Summary
This topic explains quotas as a non-tariff form of trade protection that sets a quantitative limit on imports. Quotas reduce foreign supply, raise the domestic price, increase producer surplus for domestic firms, reduce consumer surplus and choice, and create a welfare loss to society that can be shown on a quota diagram.
