If a Quota Is in Place, What Will Happen to the Price

question 52

Multiple Choice

If a quota is in place, what will happen to the price of rubber thread if there is a large increase in demand for spandex clothing (a major user of rubber thread) ?

• A) Quantity will be limited, but price will not be affected.
• B) Price will increase, but as it does so, the quantity imported will also increase. This will limit the price increase somewhat.
• C) Because of the quantity restriction, the increased demand will cause prices to increase.
• D) The impact on prices is not clear.

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Definitions:

Exclusive Jurisdiction

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Secured Claim

A creditor's claim that is backed by collateral, granting them a right to specific property if the debtor fails to meet the obligations.

Unsecured Claim

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