Management Notes

Reference Notes for Management

A ______ allows a specified number of goods to be imported each year and it not specifies from where the product is shipped and who is permitted to import.

A ______ allows a specified number of goods to be imported each year and it does not specify from where the product is shipped and who is permitted to import.


a. import quota
b. export quota
c. selective quota
d. global quota


The Correct Answer Is:

  • c. selective quota

Answer Explanation:

There is no advantage or disadvantage to any particular country or importer when it comes to this type of tariff quota, as it regulates the overall amount of goods being imported into a country. To protect domestic industries and prevent market saturation, a selective quota controls how much of a particular type of product enters the country. A quota might be set based on the demand of consumers, economic stability, or environmental concerns. In addition to changing market conditions, government policies, or trade agreements, a selective quota may also be subject to change.

An import quota restricts how much of a particular product can be imported into a country within a certain time frame. A quota of this kind not only protects domestic industries, but also regulates goods entering the country. Instead of targeting a specific country or importer, a selective quota will allow any country that complies with the quota to participate in the market.

International trade can be significantly impacted by selective quotas, which affect both exporting and importing countries. Selective quotas benefit importing countries primarily by protecting domestic industries and preventing overreliance on foreign goods. In order to support continued growth and development of domestic producers, the government can limit the amount of imported goods.

Also, selective quotas increase the price of goods for consumers, thereby negatively impacting the relationship between exporting and importing countries. Selective quotas can exacerbate trade tensions, especially if they are unfair or discriminatory.

Although many countries face challenges in regulating international trade by using selective quotas, they continue to use these mechanisms. Certain selective quotas are temporary, designed to aid domestic industries in recovering from crises or adjusting to changes in the market. In addition to being temporary, selective quotas can be permanent, protecting domestic industries for years to come.

In conclusion, selective quotas play a crucial role in regulating international trade and ensuring a balance between domestic and foreign industries. A selective quota may have both positive and negative impacts, but the decision is usually made after carefully evaluating market conditions and government policies. The success of a selective quota will ultimately depend on its ability to maintain a stable and fair trading environment for all parties, while effectively regulating the flow of goods into the country.

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