<p>The question does not ask about effect of a quota. It just states US imports tomatoes from Mexico. No quotas mentioned at all.</p>
<p>Correct answer should be:</p>
<p>lower, increase, decrease</p>
<p>Imports lower prices in US as now supply in US is larger, also people would not import the goods if they can get them domestically cheaper. CS of consumers will increase as result of this, since CS is the area below demand curve and above price and this will clearly increase that area. PS decreases as this is the area above supply curve and below price and hence this area would decrease in this case (maybe draw yourself a picture of PS and CS before trade and after trade).</p>
<p>So the correct answer would again be: lower, increase, decrease and since correct answer is not an option E is correct.</p>

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2022-10-31T13:10:36.483Z
2022-10-31T13:10:36.483Z
1muflon1
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<p>Can someone explain why? As far as I am concerned, quotas increase the price, decrease the consumer surplus, and increase the producer surplus.</p>

<supply-and-demand><international-trade>
Effect of Quota on imported goods
Angels Vásquez
# Effect of Quota on imported goods

(Asked by: username_0 on 2022-10-31)

[![enter image description here](https://i.sstatic.net/1tcqo.png)](https://i.sstatic.net/1tcqo.png)

Can someone explain why? As far as I am concerned, quotas increase the price, decrease the consumer surplus, and increase the producer surplus.

**Tags:** supply-and-demand, international-trade

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## 1 answers

### Answer by username_1 on 2022-10-31. Score: 1

The question does not ask about effect of a quota. It just states US imports tomatoes from Mexico. No quotas mentioned at all.

Correct answer should be:

lower, increase, decrease

Imports lower prices in US as now supply in US is larger, also people would not import the goods if they can get them domestically cheaper. CS of consumers will increase as result of this, since CS is the area below demand curve and above price and this will clearly increase that area. PS decreases as this is the area above supply curve and below price and hence this area would decrease in this case (maybe draw yourself a picture of PS and CS before trade and after trade).

So the correct answer would again be: lower, increase, decrease and since correct answer is not an option E is correct.


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