What is the government’s aim in setting quotas?

to create more competition in the market
to increase sales of domestic goods
to keep tariffs high
to limit export of domestic goods

to increase sales of domestic goods

Explanation:

Import quotas are a type of customs barrier. This instrument consists in the establishment by the government of a limit on the quantity of a product to be imported. Thus, the claimants of that product may import a specific quantity and nothing more.

This is a form of protectionism, since the establishment of quotas aims to stimulate the sale of domestic products. If there is a demand for the product and if the quantity that can be imported is less than the demand, consumers will necessarily have to consume the product that is manufactured domestically.

The government’s aim in setting quotas is  to increase sales of domestic goods.

Further Explanations:

Import quotas are customs barrier establishment by the government to limit the number of imported products.This is a practice of protectionism as its establishment aims to the stimulation of the sale of domestic products in the own nation. In the case of the high demand for import products is made limited then automatically the consumer will go for the alternative of that product made domestically. These policies in another term increase domestic trade.

Adam Smith, Scottish philosopher wrote the book “The Wealth of Nation” explaining the Mercantilism system explaining that to maintain a stable economy the nation should peddle goods overseas starved of ample import. By endorsing the “domestic Industry” we can confer that we are proposing to secure our nation's interest,directing the production in such a way to yield goods of great value.  

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Answer Details

Grade: High School

Subject: History

Chapter: Import quotas

Keywords:

Adam Smith, Scottish philosopher, The Wealth of Nation, Mercantilism system, tariff products, overseas,Import quotas, protectionism, domestic products, domestically,Mercantilism system, domestic Industry,

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