Which type of trade barrier completely prohibits imports once a certain limit has been reached?

• A. Tariff
• B. Embargo
• C. Quota
• D. Subsidy

Answer: (C)

Verified step by step guidance

1. Understand the definition of each trade barrier: A tariff is a tax on imports, an embargo is a complete ban on trade with a specific country, a quota is a limit on the quantity of a good that can be imported, and a subsidy is financial support to domestic producers.
2. Identify the key phrase in the question: 'completely prohibits imports once a certain limit has been reached.' This implies that imports are allowed up to a point, then stopped entirely.
3. Recall that a tariff does not prohibit imports; it only makes them more expensive. An embargo prohibits all imports regardless of quantity, not after a limit.
4. Recognize that a quota sets a maximum quantity of imports allowed. Once this limit is reached, no more imports of that good are permitted, effectively prohibiting further imports.
5. Conclude that the trade barrier described is a quota, as it restricts imports to a certain limit and then completely prohibits any additional imports beyond that limit.