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A-Level Economics · Import quota diagram question

With imports capped, total supply becomes Sd + quota. Which point is the market outcome after the quota?

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The answer

Point F. F: price Pq (£4), total quantity Q₄ (6). The quota pushes the market part of the way back towards the no-trade equilibrium E. Restricting world supply moves the market back towards the domestic no-trade equilibrium. Total supply is now Sd + quota, and it crosses Dd at F: price Pq, quantity Q₄. Ban ALL imports and you would travel all the way back to E; delete only some of them and you stop part-way, at F.

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This is one of 6 questions on the import quota diagram — every corner lettered, every wrong answer diagnosed.

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