Impact of Increasing an Import Quota

Steps:

• A quota limits the quantity of a good that can be imported.
• Increasing the quota raises this maximum allowable import volume.
• With a higher limit, importers can bring in more of the good.
• This results in greater total imports of the good.

Why D is correct:

• By definition, an import quota caps the quantity allowed; raising it directly permits more imports, increasing the imported volume.

Why the others are wrong:

• A: Demand depends on price and preferences; more supply may even boost consumption without reducing demand.
• B: Increased supply from more imports typically lowers the domestic price.
• C: Quotas generate revenue via licenses if auctioned, so more imports could maintain or raise revenue, not decline it.

Final answer: D