What effect do quotas have on the supply of specific imported goods?

Quotas are government-imposed trade restrictions that limit the quantity of a specific good that can be imported into a country during a given timeframe. By setting a maximum limit on imports, quotas effectively restrict the availability of these goods in the domestic market.

This restriction on the quantity of imported goods tends to maintain higher prices for domestic products, as consumers have fewer foreign alternatives to choose from. As a result, quotas can create a more favorable environment for local manufacturers, potentially driving up demand for domestically produced substitutes. Thus, the primary impact of quotas is to limit the importation of goods and, consequently, restrict their overall supply in the market.

This understanding clarifies why the answer highlighting the restriction of supply is accurate in the context of how quotas function in international trade.