Question

what do quotas and embargoes have in common?
○ they both tend to raise prices.
○ they both affect imports from certain countries.
○ they both set limits on imported goods.
○ they both frequently result in domestic shortages.

Explanation:

• Analyze each option:
• Option 1: Quotas (import limits) and embargoes (complete ban on trade with a country) can reduce supply of imported goods. Reduced supply often leads to higher prices (by supply - demand dynamics: lower supply with same or higher demand increases price). But embargoes are more about trade restrictions with specific countries, not just price - raising. However, let's check other options.
• Option 2: Quotas can be on imports from any country (not just certain ones), and embargoes are on trade with specific countries. So this is not a common feature for both in all cases.
• Option 3: Quotas set a limit on the quantity of imported goods. Embargoes are a complete ban (a limit of zero) on trade (imports/exports) with a country. So both set limits on imported goods (embargo is a limit of zero imports from the embargoed country, quota is a non - zero limit). This is a more fundamental commonality.
• Option 4: Quotas may or may not lead to domestic shortages. Embargoes, if the country was a major supplier, could lead to shortages, but it's not a frequent result for both in all cases.

Answer:

C. They both set limits on imported goods