Cambridge O Level Business Studies · Syllabus 7115 · External Influences on Business Activity
Import Quota
What is Import Quota?
A physical limit set by a government on the quantity of a particular good that may be imported into a country during a period. Unlike a tariff, which works through price and allows any quantity to enter provided the tax is paid, a quota fixes the maximum quantity, so beyond the limit no further imports may enter at any price. Quotas can create shortages and price rises in the domestic market, and businesses depending on imported inputs may be unable to obtain them regardless of what they are willing to pay.
This definition is part of the External Influences on Business Activity chapter in Cambridge O Level Business Studies.
Questions students ask about Import Quota
What is the difference between an import tariff and an import quota?
A tariff is a tax on imports: goods can still enter in any quantity, but each one now costs more once the tax is paid. A quota is a physical limit on quantity: beyond that limit, no further imports may enter at any price. The two work through different mechanisms, so their effects on a business that depends on imported inputs differ too.