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Quota

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Quota
Definition

Quota is a limit set on the quantity of a good or a service that can be sent into the country or sent out of a country. It is a kind of trade barrier. It is a trade restriction that limits the amount of a good or a service that can be imported into a country or exported out of a country in a given period of time. An import quota is used to import fewer goods or services into the country. An export quota is used to limit a good or a service of a country for going out. Quotas are used in international trade. It is use to help regulate the volume of trade between countries. There are many advantages and disadvantages in the use of quotas in a country.

Import Quota Advantages

One of the advantages of import quotas is that it benefits domestic producers. When a country imposes an import quota or limits a specific good or service into a country, the domestic producers benefit most because they have less competition. This will allow the domestic companies to earn more money because they can charge a little more for their goods.

Another advantage of import quotas is that it keeps people from losing their jobs in the domestic country. People will have jobs as long as the domestic company has sufficient business to sustain. When an import quota of a certain good or service is set within a country, domestic countries will be able to give their domestic producers a chance to produce more, which enables the companies to support their workers.

Besides that, import quotas also protect the domestic country. The country is protected from other countries from dumping their excess goods into them, which will possibly drive other competing company out of business.

Import Quota Disadvantages

One of the disadvantages of import quota is that it hurts the consumers. Consumers have to pay a higher price for domestic goods. Because the country imposes

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