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A production quota is a goal for the production of a good. It is typically set by a government or an organization, and can be applied to an individual worker, firm, industry or country. Quotas can be set high to encourage production, or can be used to restrict production to support a certain price level.[1]

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CriticismEdit

Quotas, like other trade restrictions, are typically used to benefit the producers of a good at the expense of consumers in that economy. Possible effects include corruption (bribes to increase a quota allocation) or smuggling (concealed actions to exceed a quota). Quotas are considered to be less economically efficient than tariffs, which in turn are less economically efficient than free trade.[citation needed]

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ReferencesEdit

  1. ^ Parkin, Michael; Powell, Melanie; Matthews, Kent (2007). Economics. Pearson Education. p. 134. ISBN 0-13-204122-7. Retrieved 25 March 2009.

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