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Principles of Economics/Quota

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A Quota restricts the amount of goods that may be produced, imported, made available, etc. This effectively cuts off the supply curve anywhere beyond the quota. The quota itself shows up as a vertical line; all trade to the right of the quota line ceases. Prices are kept unnaturally high due to the unnaturally reduced quantity available. This is what the figure shows.

Fig - 1. Quota applied to a standard supply demand model.
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