quota

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Quota

Quota

1. The amount a country contributes to finance the International Monetary Fund. The IMF determines quota based upon how much each country contributes to the global GDP. Each country's quota also influences its voting power in matters of IMF governance. Larger countries both contribute and vote more. The quota system has proven to be controversial, as it gives smaller and less prosperous countries a lesser voice.

2. The most barrels of oil an OPEC member state may produce per day. OPEC sets quotas in order to influence the price of oil. It raises quotas when it wishes to lower the price and lowers them when wishes to increase the price.

3. Any minimum or maximum limit, especially one imposed by an authority. For example, a journalist may be required to write a minimum quota of articles per week, or an employee may not be allowed to work more than the maximum quota of hours to avoid charging his company overtime.

4. See Import quota.

quota

A maximum or minimum limit on quantity. Applied to imports, a quota designates the maximum quantity of a product that may be brought into a country during a specified period of time. Quotas can have significant impact on certain industries and companies. The establishment of a quota or a change in an existing quota can influence the price of the affected firm's securities. See also tariff, trigger price.

quota

an administrative limitation on the production of, or trade in, a particular product imposed by suppliers or by the government.
  1. Producers' CARTELS typically place a limitation on the total output of a product so as deliberately to restrict its supply to a predetermined level and then use a quota system to allocate output between member firms;
  2. Trade quotas are imposed by governments as a means of restricting IMPORTS of a product to a specified level in order to protect domestic producers (see PROTECTIONISM) and assist the country's BALANCE OF PAYMENTS, or, alternatively, they can be used by exporting countries as a means of restricting exports. Unlike TARIFFS where suppliers may be prepared to absorb the duties imposed in order to maintain their sales, quotas reduce the volume of foreign sales in the home market and in some cases may completely deprive a firm of access to the market. For this reason MULTINATIONAL ENTERPRISES may set up a local manufacturing plant to replace exports to the market. See FOREIGN MARKET SERVICING STRATEGY, LOCAL CONTENT RULE.

quota

an administrative device to limit
  1. output or
  2. trade.
  1. Under a producer's CARTEL arrangement, each supplier is given a fixed output to produce. Quotas are used by the cartel to establish monopoly prices by ensuring that the total of the firms’ output quotas is restricted relative to market demand;
  2. Under a trade quota system, the government directly restricts the volume of permissible IMPORTS to a specified maximum level (the import quota) in order to protect domestic industries against foreign competition. As a protectionist device, a quota is much more effective than TARIFFS, especially when import demand is price-inelastic (when import demand is price-inelastic, increasing import price has little effect on the volume of imports). In these cases the only certain way of limiting imports is physical control. See also PROTECTIONISM.
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