ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Although tariffs on imported raw materials will protect domestic producers of those commodities, such tariffs will also increase the costs to domestic manufacturers who use those raw materials. These conditions necessitate a distinction between nominal and effective rates of protection.

Detailed explanation-2: -A tariff-induced price rise creates a gap between prices in the importing and exporting countries. This in turn causes supplies (production) to rise in the importing country, while demand (consumption) falls, which is the essence of the “industrial protection” function of tariffs.

Detailed explanation-3: -Governments impose tariffs to raise revenue, protect domestic industries, or exert political leverage over another country. Tariffs often result in unwanted side effects, such as higher consumer prices.

Detailed explanation-4: -The imposition of tariffs and quotas translates to increased prices and a decline in the supply of imported goods.

Detailed explanation-5: -These include specific tariffs, ad valorem tariffs, compound tariffs, tariff-rate quotas, and retaliatory tariffs. A specific tariff is a tax imposed directly onto one imported good and does not depend on the value of that imported good.