How Does a Quantitative Restriction Work to Limit Exports

question 14

Multiple Choice

How does a quantitative restriction work to limit exports?

• A) By maximizing the impact of international demand on the domestic market,it reduces domestic prices,as well as local production and export quantities,while increasing local consumption.
• B) It has very different effects as an export tax
• C) By limiting the impact of international demand on the domestic market,it reduces domestic prices,as well as local production and export quantities,while increasing local consumption.
• D) It decreases production so that both domestic and foreign consumption decreases.

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Definitions:

Revenue Maximization

A strategy or objective focused on increasing the total income generated from sales or services, without necessarily maximizing profit.

Cournot Equilibrium

The Cournot equilibrium is a concept in economic theory where firms reach a state of balance in quantity and price in a duopoly, where each firm's output decision best responds to the output decision of the other firm.

Downward-Sloping

A term describing a curve or line that decreases in value as it moves from left to right, often used to describe demand curves in economics.

Cournot Equilibrium Price

A concept in oligopoly theory where each firm chooses its quantity to maximize profit, assuming the other firms' quantities remain fixed, leading to a stable market price.