Effect of Quota with Home Monopoly Under free trade, the Home monopolist produces at point B and charges the world price of PW. With a tariff of t, the monopolist produces at point C and charges the price of PW + t. Imports under the tariff are M2 = D2 − S2. Under a quota of M2, the demand curve shifts to the left by that amount, resulting in the demand D − M2 faced by the Home monopolist. That is, after M2 units are imported, the monopolist is the only firm able to sell at Home, and so it can choose a price anywhere along the demand curve D − M2. The marginal revenue curve corresponding to D − M2 is MR, and so with a quota, the Home monopolist produces at point E, where MR equals MC. The price charged at point E is P3 > PW + t, so the quota leads to a higher Home price than the tariff.