Which of the following statements is true about voluntary export restr

QUESTION

Which of the following statements is true about voluntary export restraints (VERs)?

A. VERs benefit consumers by limiting import competition.

B. VERs reduce the domestic price of an imported good.

C. When imports are limited to a low percentage of the market by a VER, the price is bid up for that limited foreign supply.

D. Foreign producers agree to VERs because they fear economic instability in the world economy.

E. VERs negatively affect domestic producers by increasing import competition.

ANSWER

C