Removing import quotas boosts foreign competition

Steps:

• Import quotas restrict foreign goods, shielding domestic producers from competition.
• Removing the quota increases import supply, often at lower prices due to comparative advantage.
• Domestic consumers shift purchases to cheaper imports.
• This reduces overall demand for higher-priced domestic goods.

Why A is correct:

• Law of demand: Increased import supply lowers prices, diverting consumer preference and decreasing demand for domestic production.

Why the others are wrong:

• B: More imports likely increase domestic unemployment by shrinking local production and jobs.
• C: Exports remain unaffected, as quota removal targets imports only.
• D: Higher imports widen the trade deficit, not decrease it.

Final answer: A