SQA National 5 Economics Practice Exam 2025 – Comprehensive Study Resource

Quotas specifically refer to limitations placed on the quantity of a specific product that can be imported or exported during a given time period. By implementing quotas, a government can control the amount of foreign goods entering its market to protect domestic industries from excessive competition. This can help ensure that local producers have a fair chance to sell their products, maintain market stability, and manage trade balances. As a result, the correct answer highlights the key role that quotas play in regulating the volume of certain imports, which can directly influence market dynamics in a country.

The other choices do not accurately capture the essence of what quotas are designed to do. For instance, quotas are not utilized to determine the quality of goods or to dictate the pricing strategies of businesses. Additionally, unlike tariffs or other trade regulations, quotas do not dictate the duration of trade agreements. Thus, the function of quotas primarily centers around controlling the volume of imports.