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The government of Ledroy Coast, an island country, has imposed restrictions on the number of cars that can be imported in one year from Randavia, a leading car manufacturing country. This has helped the domestic car manufacturers of Ledroy Coast in increasing their market share. What trade restrictions has the government of Ledroy Coast imposed in this scenario?

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Answer:

Quota

Explanation:

A quota is a type f trade restriction which  limits the amount of goods that can be imported. In this case, the number of cars that can be imported from Randavia into Ledroy Coast has been limited to a certain number.

If for example the demand for cars in Ledroy Coast is 10,000 cars per annum, and the quota on imported cars has been set at 2,000, that means that  customers have to explore and buy locally manufactured cars, and local manufactures will sell 8,000 cars in that year. A quota would thus leave most of the car market to local car manufacturers.

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