Assertion: Quotas specify the quality of goods which can be imported.
Reasoning: Quotas restrict imports and, therefore, protect the domestic firms from foreign competition.
Answer & explanation
Correct answer: option 4
The correct answer is Option 4: Assertion (A) is not true but Reasoning (R) is correct.
Explanation:
- Assertion (A) is incorrect because quotas specify the quantity of goods that can be imported, not the quality.
- Reasoning (R) is correct because quotas do restrict imports and help protect domestic firms from foreign competition by limiting the amount of foreign goods entering the market.
Tariffs are a tax on imported goods; they make imported goods more expensive and discourage their use. Quotas specify the quantity of goods which can be imported. The effect of tariffs and quotas is that they restrict imports and, therefore, protect the domestic firms from foreign competition.