A government has been shielding its domestic car industry by using a quota on imported cars. It then abolishes the quota and substitutes it with a subsidy for domestic car producers. What effect will this have on the price of cars and the amount of consumer choice?
- Aprice of cars: decrease; level of choice: decrease
- Bprice of cars: decrease; level of choice: increase
- Cprice of cars: increase; level of choice: decrease
- Dprice of cars: increase; level of choice: increase