Assume the auto market is initially in equilibrium with imports from J

Assume the auto market is initially in equilibrium with imports from Japan taking up a significant share of the market. Now assume a quota on imports of Japanese cars is established.

What will occur at the initial equilibrium price to signal market participants regarding the change that has taken place? A) A surplus is created by an increase in supply.
B) A surplus is created by a decrease in demand.
C) A shortage is created by an increase in demand.
D) A shortage is created by a decrease in supply.

ANSWER

D