Quota for a Small Country Under free trade, the Foreign export supply curve is horizontal at the world price, P^W, and the free-trade equilibrium is at point B with imports of M₁. Applying an import quota of M₂ < M₁ leads to the vertical export supply curve

—with the equilibrium at point C. The quota increases the import price from P^W to P₂. There would be the same impact on price and quantities if instead of the quota, a tariff of t = P₂ − P^W had been used.