Question

A tiny South Pacific island country produces large quantities of coconut-based products. To protect this industry, the island government mandates that only designated trading companies can import the crop, each of which is allocated the right to import a maximum number of pounds of coconuts each year. This is an example of a(n)...a. import quota

b. import duty

c. import tariff

d. subsidy

e. local content requirement

Answer 1

(a) Import Quota

Step-by-step explanation:

Option B is wrong because import duty is the tax, which is collected from imported products. It cannot restrict any items or protect the coconut-based products industry.

Option C is incorrect because import tariff allows charging imported products at higher prices to restrict import goods. In that case, the company does not increase the imported goods price.

Option D is incorrect because the company does not get a subsidy from the government.

Therefore, option A is the answer because import quota restricts companies from importing goods and services on a limited basis to protect the local manufacturers.