Respuesta :
If the European Union put a quota on American jeans only allowing a small portion to be imported the demand for the jeans would rise even though the supply would not follow that. When there is a small limit on something that consumers want, the price usually goes up because they know they will sell the items regardless and in this case that may happen. The price of jeans will rise, the demand will rise, but the supply will not.
The quota on American jeans will increase the price of American jeans and make them more desirable in the European Union.
Further Explanation:
Luxury items:
Luxury items refer to the commodities that are highly desirable and considered as a status icon in a specific society or community. Generally, the consumption of luxury items is regarded as conspicuous consumption. Conspicuous consumption refers to the use or purchase of the commodity to show one’s wealth. The luxury items are costly than the normal commodity.
Explain the effect of the quota put by the European Union (EU):
If the European Union set a quote and only allow the import of only 4,000 pair of jeans, then the demand of the American jeans will increase. The increase in the demand for the jeans will lead to an increase in their price. The scarcity of the product will make it more desirable in the EU.
Thus, the quota on American jeans will result in an increase in the price of American jeans and make them more desirable in the European Union.
Learn More:
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Answer Details:
Grade: High school
Chapter: Types of goods
Subject: Economics
Keywords: What, would, happen, European, Union, put, quota, American, jeans, only, allowed, 4,000, pairs, jeans, imported.
