What does "import quota" refer to?

The concept of "import quota" specifically refers to a limit on the quantity of a good that can be imported into a country during a specific timeframe. This regulatory measure aims to protect domestic industries by controlling the amount of foreign goods that can enter the market, thus preventing an oversupply that could negatively impact local producers. By imposing a quota, governments can manage trade balance and promote local economic growth while still allowing some level of foreign competition.

The other options describe different trade-related concepts. For instance, a tax on imported goods, known as a tariff, is used to increase the cost of foreign products and protect local industries but does not limit quantity directly. A subsidy, on the other hand, refers to financial support provided by the government to boost domestic production, which is distinct from the concept of import quotas. Lastly, a free trade agreement does not impose limits but rather promotes unrestricted trade between countries, allowing goods to flow without quotas or tariffs.