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How to find the quantity demanded by domestic consumers after the quota’s implementation

How to find the quantity demanded by domestic consumers after the quota’s implementation

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Answer #1

Quota is imposed by the government in order to protect domestic producers and reduce competition of foreign firms. When quota is imposed, imports decreases and domestic production increases. Domestic producers get freedom to set their own prices because there are no options available for customer and they are forced to buy from them.

They may increase the price of goods and services and consumer will be forced to buy goods and services from them at higher prices. Thus demand of domestic goods will rise.

To calculate quantity demanded of domestic consumers we must need demand function and supply function. At equilibrium demand is equal to supply and therefore by keeping demand functional equal to supply function we will be able to calculate quantity demanded and price of goods and services in domestic market.

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