Quotas restrict imports, boosting domestic producers' revenue

Steps:

• A quota limits the number of imported cars entering the market.
• This reduces overall car supply in the domestic market.
• With fewer imports, domestic prices rise due to scarcity.
• Higher prices allow domestic producers to sell more at better margins, increasing their total revenue.

Why D is correct:

• By definition, import quotas shift demand to domestic goods, raising prices and producer revenue as per supply-demand equilibrium.

Why the others are wrong:

• A: Domestic output increases to meet the shortfall from restricted imports.
• B: Domestic prices rise, not fall, due to reduced total supply.
• C: Quotas generate no tax revenue for the government; any gains accrue to quota holders or importers.

Final answer: D