Removing import quotas boosts competition from foreign goods

Steps:

• Import quotas restrict foreign goods entering the market, shielding domestic producers.
• Removing the quota increases import supply, often at lower prices due to comparative advantage.
• Domestic consumers shift purchases to cheaper imports, reducing demand for local alternatives.
• This leads to lower sales and output for domestic firms.

Why A is correct:

• Per the law of demand, cheaper imports draw consumers away from domestic goods, decreasing demand for domestic production.

Why the others are wrong:

• B: Increased imports likely raise domestic unemployment by contracting local industries.
• C: Exports remain unaffected as the policy targets imports only.
• D: Higher imports widen the trade deficit by increasing the import-export gap.

Final answer: A